How to extend 5/8" window jamb?
When I do jamb extensions, I'm butting tight against the existing window frame, but nailing through shims into the rough framing. I offset the jamb extension by about 3/16", and caulk that reveal. In that scenario, the only time 5/8" material in the window frame would be a problem was if the window was tight to any or all of the framing. If that was the case, I'd get 1/2" actual stock (good lumberyard!) and be happy with a 1/8" reveal.

As far as justification for 5/8" stock... well, we seem to be in a race to the bottom with building materials. Anyone that can squeeze a penny here or there makes more money. (The one that made me laugh/cry was the entry door that had hinges double-thick mortised into the jamb and flush mounted on the door. Ta-dah! One less step in the manufacturing process, and it probably only looks terrible to people like me.)