The original definition of how a DNS wildcard behaves is specified in RFC 1034 sections 4.3.2 and 4.3.3, but only indirectly by certain steps in a search algorithm and as a result, the rules are neither intuitive nor clearly specified.
As a result, 20 years later, RFC 4592, "The Role of Wildcards in the Domain Name System" was written to help clarify the rules.
To quote from RFC 4592, many DNS implementations diverge, in different ways, from the original definition of wildcards.
Some of the variations include: Wildcard domains are widely used by blogging websites that allow users to create sub-domains upon demand; e.g., sites such as WordPress or Blogspot.
Another popular use is by Free Dynamic DNS websites that allow users to create a DNS name that changes to match their host IP as the IP address is changed periodically by their ISP's DHCP server.
New gTLDs are prohibited from publishing wildcards (or using equivalent name server mechanisms) by specification 6 of the ICANN New gTLD Base Registry agreement.
It has also become common for ISPs to synthesize address records for typos, for the same person, a practice called "catchall" typosquatting, but these aren't true wildcards, but rather modified caching name servers.