yellow,
here's what I *think* i know:
Paints are usually differentiated by two things: 1. the way they 'cure', and 2. their base
There's lots of complicated paint formulas out there, but the basic ones are enamels and laquers. Most hobby paints are enamels and the usual distinction between them is whether or not they are oil based or water based (as you noted.)
Here's the way I understand it:
Enamels - there is a chemical reaction in the paint that allows it to 'cure' once it's applied. This usually takes several days/weeks to happen and I think that the gloss paints are what takes the longest to cure. (usually they dry to touch relatively quickly, but will not dry to a hard durable finish until the curing is complete.) The paint can be either oil based or water based. I don't know if the base has much impact, but it might affect the way the paint 'adheres' and possibly the curing time? Generally I think it comes down to the fact that water based paints are easier to use because they clean/thin with regular water rather than varsol or some other oil based item.
The thing that complicates this is that most hobby people refer to oil based paints as 'enamels' and water based paints as 'acrylics'. I *think* that they are both enamels, it's just that one is oil based and the other is water based (I think that the paint pigments themselves are different too if it is water or oil based)?
Examples of oil based enamels are: Testors and Humbrol
Examples of water based enamels (acrylics) are: Gunze, Tamiya, Testors Acryl.
Someone correct me if I'm way off on this.
Then there are lacquers. They are different from enamels in that the paint does not 'cure', it simply comes to be as the 'solvents' in the paint evaporate. The idea is that as soon as the solvent is evaporated, the paint is done curing. This usually happens much quicker than with enamels. The disadvantage of lacquers is that the solvents are usually very 'hot' and plastic does not deal well with them. Because they dry so fast, you can usually spray very light coats onto the model without damaging the plastic, but a primer is always recommended. The solvents are quite toxic and these paints are usually quite stinky so a respirator or spray booth is recommended. The interesting thing about lacquers is that you can actually get an 'acrylic lacquer' which seems like a funny thing if your used to the 'hobby' definition of acrylic. But, these paints are usually very complex and used in custom high-end paint applications only (ie. automobiles, etc)
Examples of lacquers are usually found in spray cans. I'm not sure of any specific name brands, but usually it will say either 'lacquer' or 'enamel' on the can. I *think* you can get some lacquers in small bottles, but I'm not sure what the brand names are
After re-reading your question, I'm not sure that this totally answers your question, but I'll go with it anyways. Also consider that this is how this whole thing sits in my mind and it has been known to be warped in the past. Paints and their chemical makeups are very complex and there are all kinds of half-breeds and special formulas out there. But, generally I think the above description covers the basics.
The general rule is that you can apply any 'cooler' paint over a 'hotter' paint. The hottest would be lacquers, and the coolest would be water based enamels (ie acrylics). You can go in reverse, but you are generally playing with fire unless the paint coats are very thin and dry quickly. I have applied oil base enamels (testors) overtop of water based enamels (tamiya) in the past with success, but you really need to make sure that the base coat is fully cured.
Hope that gives you a starting point. Maybe someone else has some thoughts about when it is best to use oil vs. water based paints (which is what I think you originally asked for....)
M.