All houses need to keep water out of the wall cavity, and all codes require an exterior membrane over the sheathing and behind the siding to achieve this effect. The difference with Tiny Houses is that, because of the small spaces, sealed windows, and more intense human occupancy (breathing), as much or more moisture can be driven into the walls FROM THE INTERIOR. I recommend a careful read of The Green Building Advisor’s (GBA’s) section on Water-Resistive Barriers (WRBs) and also recommend using the GBA as a core resource for detailed information on the science and techniques of building homes. The sources of exterior moisture are wind-driven rain and humidity. There is also a newly-discovered factor called “inward solar vapor drive” forcing moisture through your siding and sheathing into the wall cavity on hot days. Here are the basics:
a) Exterior WRBs are common in the building world, but I am recommending a second layer of an INTERIOR WRB to keep interior humidity from entering your walls.
b) I am recommending a non-perforated, vapor permeable membrane at the interior and a 3-dimensional or wrinkled house wrap at the exterior. Cedar Breather is a good example. Redwood and cedar (shingles) have natural sugars and chemicals that can attack polyolefin and felt membranes.
c) moisture in the wall cavity can lead to mold and rot in a very short time (3-5 years). Since moisture naturally travels downward, I recommend using pressure treated sole plates (at the bottom of the wall) and even installing a sheet metal z-flashing between the sole plate and the subfloor (PM me for the detail) to direct any wall-originated moisture to the exterior.
d) pay close attention to all corners at roofs, walls, door and window penetrations. I recommend using a stickey-backed, self sealing 6″ – 8″ wide tape to flash around these openings. Seal doors and windows to these tape membrane strips with recommended caulking products. Back-prime and set exterior casings and siding into beds of approved caulking. Use the “belt and suspenders” philosophy as much as possible, layering caulked and sealed assemblies on top of each other. Floor rot and mold are huge potential health and structural problems and are very costly remove or repair.