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I've been discussing specifics of an electrical job with a licensed electrician and he mentioned that in my area, it's acceptable/recommended to feed 12 gauge NM wire through an outdoor conduit but that the PVC sheathing SHOULD be removed if the wiring is going to travel through more than 6 feet of conduit.
This doesn't make sense to me. How/why would that be better than keeping sheathing on through the conduit run? Condensation?
You can run type NM cable in conduit, as long as the conduit is sized appropriately, and is not in a wet or damp location.
If you remove the sheath from the conductors inside NM cable, you cannot use the conductors for anything (anything electrical anyway). Type NM cable is rated, listed, and labeled as a cable assembly. The conductors inside are not listed or labeled, so cannot be used on their own.
Next time you have a bit of scrap NM cable, strip the sheath off and take a look at the wire inside. You'll notice that there's no printing on the insulation.
There is a widespread belief that the NEC does not allow NM-cable in conduit, but does allow THHN (the individual wires). This belief is incorrect.
However, it is for some reason lesser-known that NM-cable cannot be used in outdoor conduit at all, stripped or otherwise.
So, the answer to your question is: stripping is a common but misguided (unnecessary) practice when using NM-cable in indoor-conduit. And it is not allowed at all when going through outdoor conduit, like in your case.
It's a heat buildup issue. The outer jacket of NM cable is there to protect the internal conductors from damage. Conduit's purpose is to protect the conductors from damage. Having both is redundant. A conductor's current rating is based on its ability to shed sufficient heat to prevent damage to its insulation at that current rating. When you have NM in conduit you complicate the current rating calculation. It's like wrapping someone in more and more blankets. It may protect them from bumps and bruises, but eventually they die from heat stroke.
Consider a piece of 12ga wire. It's rated for 20amps. The resistance of 12ga wire is 1.588 milliohms per foot. At 20amps, a 12ga piece of wire needs to shed .635 watts per foot. That heat has to be radiated away. If it's allowed to build up, the conductor's insulation could be damaged.
Best practice is never to run NM inside conduit. Even if you work out the current load de-rating and verify that it's safe, you don't know what the next guy may shove into that conduit. Plus, on anything less than short runs, it's next to impossible to pull solid conductor NM through conduit, when you could pull individual conductors of stranded THHN/THWN with far less effort.
You can fit more conductors (More circuits) inside a conduit using THHN then you can with NM Cable. A NM Cable is typically 1/2" wide and carries three conductors, but NM cable is noticeably larger then three THHN wires. You can fit more circuits inside of conduit using THHN then you can with NM Cable, particularly when there are twists & turns or 90-degree bends in your conduit.
Imagine if you were an electrician who was hired to run an additional circuit through preexisting conduit. Normally, one can fit 3 circuits inside of this conduit. You open the box and discover 2 NM cables shoved down the conduit with no room to run THHN wire. Now you can't proceed without running a second conduit. Many electricians wouldn't like this as it means more work.
Its a heat build-up issue: wire in conduit must be allowed either radiate (without sheath) or the current carrying capacity must be derated. This is true also in bundles of sheathed wire running in parallel.
