What is the reasoning behind the statement "Faulting will occur along the plane where the shear stress is the highest"?
This statement is referring to depths within the crust where the lithostatic pressure is sufficiently high to suppress the formation of dilatant fractures. Rock is a brittle material, and if loaded to failure while under little or no confining pressure, it may fail by the growth of mode-I fractures oriented normal to the least compressive stress. At depth in the crust, the overburden weight of rock may cause sufficient pressure to suppress the growth of mode-I fractures, but if the stress is sufficient to cause mode-II fractures, these tend to grow in the plane of maximum shear stress.