Back in 2013, JLC published 'Efficient Hot-Water Piping', where author Gary Klein makes the case for smaller-diameter hot water piping. In it, Klein writes that both water and energy is wasted in most homes:

Traditional methods of sizing distribution piping are based on maintaining adequate system pressure. Plumbers often use oversized pipes to overcome the pressure drop caused by excessive pipe lengths and sharp changes in direction. It's not unusual to see a 3/4-inch-diameter supply line installed where a 1/2-inch-diameter pipe will provide adequate flow, even though this nearly doubles the volume of water contained in the pipe. In cold-water piping, excess volume doesn't waste water or affect energy performance, but in hot-water piping, it's a different story. Unless that extra volume of water is already hot, it will have to be purged from the pipe before hot water is delivered to the fixture. This wastes both water and energy. In fact, in the typical household, as much as one out of every three gallons of heated water runs down the drain unused.

In the recent Energy Vanguard article A Hot Water System Retrofit for an Old House, Allison Bailes takes a close look at a project where Klein's basic ideas were put into practice on an existing home. By modifying the hot water lines with a manifold and new insulated 1/4-inch PEX distribution lines, the homeowner was able to reduce the time that it took hot water to be delivered to his kitchen faucet from over to a minute to less than 8 seconds. Read more.