Typically the engine "restarts" when rpm drops to a bit above idle speed but as mentioned it doesn't happen as much in automatics because of the freewheeling. In automatics it only occurs when deceleration starts at high rpm or the clutch within the torque converter is locked during steady highway driving. I assume shifting into "low" may enable deceleration fuel cut in more situations assuming the driver may be using it to slow down, but I have no evidence of that usage
When you're downshifting you're braking with your engine. This means two things:
1. Less fuel is burned. The injectors are closed while the engine is braking.
2. Momentum, not fuel, is used to drive the alternator, AC etc.
If you instead were to brake the car, it would need to use fuel just to keep the engine running. In the same way as it would if you were idling parked. Even more fuel is needed to combat the resistance from your AC and alternator.
[0] Deceleration fuel cut off
In addition to that, some newer cars charge battery when engine braking. Which is effectively saving fuel later.
Semis utilize this mode of braking heavily: https://en.wikipedia.org/wiki/Compression_release_engine_bra...
Because burning more gas is better than heating up break pads?
Reference?