The docs for version v0.151.2 say

The archetype lookup order is:

1. archetypes/posts.md
2. archetypes/default.md
3. themes/my-theme/archetypes/posts.md
4. themes/my-theme/archetypes/default.md

If none of these exists, Hugo uses a built-in default archetype.

But this does not match current lookup behavior and code

This repo is to showcase actual behavior

$ hugo new posts/post-1.md
$ hugo new articles/article-1.md

Expected content to be created:

Post: This is site post
Article: This is site default

Actual:

Post: This is site post
Article: This is theme article

$ hugo new posts/post-1.md
$ hugo new articles/article-1.md
$ hugo new stories/story-1.md

Expected content to be created:

Post: This is site post
Article: This is site default
Story: This is site default

Actual:

Post: This is site post
Article: This is theme article
Story: This is fallback story