Matching child elements in XSL

I thought I saw a mistake in an answer to this question, and pointed it out. I was told I was incorrect, and my answer was later deleted.

I still don't see how I was wrong. Therefore, I am posting here and hoping someone can explain my misunderstanding to me.

The answer I responded to explained the use of apply-templates. It contained the following XML and XSL, describing how the templates would be matched:

<!-- sample XML snippet -->
<xml>
  <foo /><bar /><baz />
</xml>

<!-- sample XSLT snippet -->
<xsl:template match="xml">
  <xsl:apply-templates select="*" /> <!-- three nodes selected here -->
</xsl:template>

<xsl:template match="foo"> <!-- will be called once -->
  <xsl:text>foo element encountered</xsl:text>
</xsl:template>

<xsl:template match="xml/*"> <!-- will be called twice -->
  <xsl:text>other element countered</xsl:text>
</xsl:template>

My comment was that the last template in should be:

<xsl:template match="*"> <!-- will be called twice -->
  <xsl:text>other element countered</xsl:text>
</xsl:template>

because the current node is already <xml>

I was told:

No, xml/* is a pattern that matches child elements of an element with the name xml.

Testing the original answer

However, with this XML:

<xml>
  <foo /><bar /><baz />
</xml>

And this XSL stylesheet (filling out the snippet above):

<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
  <xsl:output method