My take on this.
What do you mean by 'wrap'? It is not the bleached subject outline that you get by excessively over-exposing the background.
My understanding of wrap is that it is the specular highlight you get off the background on hair and cheeks - which is a reflection of the background which 'wraps around' the sides of the subject (angle of incidence equals angle of reflectance). To minimise wrap, you need the background to be only just wide enough to cover the subject. Given that you generally can't change the size of the background easily, you do this normally by moving the subject backwards/forwards from the background, which changes the size relative to the subject. Sometimes loads of wrap (big background, subject close to it) suits the generally high-key blown-white background look, but it makes exposure even more critical if you are not to lose the subject against the white.
The reason you can shoot close to a Hi-lite is because it is back-lit, though you'll get a lot of light wrap because the width then becomes effectively huge. You can't normally get that close to a conventionally lit white paper background because you need some distance for the lights or the subject gets in the way, possibly casting shadows but almost certainly catching some unwanted spill. Barn-doors would help there.
If your subject is static, or can be placed within a small area, it is much easier to set up the lights even in a confined space. But that is hopeless with young kids. They need space to move around and therefore you need a much bigger space to have any hope of getting even coverage. There is no perfect solution but for small locations (ie people's homes) I think a Hilite is very well worth having. I think it will save me two feet, maybe three, which when you're hard up against the sofa and the telly, is a godsend. I've got one on order from FITP.
I believe the Lastolite video says two stops over exposure for the background because it effectively also becomes the light for the train. If you are only half a stop or so up on the Hilite, the train will be a stop or more down on that, ie grey, so you need to pump everything up a bit. Dangerous game, but of all the various compromises you have to make, perhaps the best one.
Lighting the train is another balancing act and I think the best way to do it is set the Hilite as high as you dare, then with the front subject light use a BIG softbox (have you got one Gary?
) but set it back a bit - which you can do because it's big and still get plenty soft light. This minimises fall-off.
In this way, the front light also adds to the front of the train so that, with the Hilite illuminating the back of the train, between the two, everything comes out as close to pure white as possible.
Hope that makes sense
Edit: crossed post with Garry. I still think there is some confusion between the terms 'wrap' and 'edge degradation'. I think I've made the way I see it clear above - ie, as two compeletly different things. If you get the exposure levels right, there is no reason why you shouldn't put a subject right up against a Hilite, touching it even, and still get no edge degradation (bleaching) but you'll get tons of wrap because the background has become relatively enormous - almost 180 degrees. Diffused, or backlit, or whatever, has nothing to do with edge degradation, only exposure levels.