How to switch 40A timer used for outdoor lighting and direct 120V outdoor lighting
The key is to provide protection at the lowest level needed.


Wire - smallest size (highest AWG) determines necessary protection. So with 10 and 12, you breaker for 12 == 20A max.
Switches - lowest current rating determines necessary protection. 20A switches are more expensive than 15A switches, but they are readily available. Moving down to 15A is likely just fine if you switch from other lighting to LEDs, but then your breaker will have to go down to 15A. Oops. According to Harper, switch rating depends on loads. So as long as the switched load is lights only (because if it includes a receptacle then you need to allow for that potential load), if you are using LEDs (or other types with a real max. of 1,440 W) then you can stick to 15A switches but still have a  20A circuit with a 20A breaker.
Timers and other devices - a 40A timer can work on a 15A or 20A circuit just fine.
Lights - the total of all lights should be &lt;= 80% of the breaker. 80% of 15A x 120V = 1,440 W. 80% of 20A x 120V = 1,920 W. That isn't much for incandescent, but (as noted by Ed Beal) is a lot for LEDs.


In the end, the lowest common denominator - likely switches in your case - determines the breaker size. The breaker size then determines the maximum lighting load.

One caution: 10 AWG is non-standard enough that anyone looking at it will hopefully not assume that the circuit is really a 30A circuit all the way end-to-end. But 12 AWG is standard enough that if you use a 15A breaker then someone looking at it later may not realize there are 15A requirements in the circuit, see the 12 AWG wire and decide to upgrade the breaker to 20A (e.g., to support some receptacles in addition to the lighting). So if you downsize to 15A then label it in the panel as a warning to not assume 12 AWG = 20 A.