Bike (Tracer, fox Van Ti Coil) performs nicely. Over rolling dips (imagine 6″ deep singletrack dips) I can feel the rebound push the shock smoothly back. Its not uncontrolled and doesnt ping me off, but it does make me feel like every thing is “working”.

Then, add just one click of rebound damping. Although the shock is working, i can’t feel it come back any more. Visually it does, and i anything the bike feels more controlled than before but I am isolated from the return stroke.

I’m probably worrying about nothing, but whats best? and how would I know that the shocks packing down over multiple hits in the second scenario?

i can’t feel it come back any more. Visually it does,

This suggest that its better than before. It also suggests you’re running your rebound faster than some – but its a personal thing.

If its packing, it will feel progressively harder and more skittish on fast stutter bumps.