bit confused..why are you going over the tile, instead of cutting the tile tothe bottom of the molding?

Hmm I guess I'm thinking that the pencil will protrude too much under the crown and it will look like it was an after thought..whereas in this pic they somehow managed to line up the pencil thickness with the tile which looks great.

The only thing I can think of is they used furring strip to bump out the wall a bit, but then that cannot be the case as the tiles seem to line up from the backsplash to the shower area...Hmm.

The way I read your text versus the photo is that you're concerned about the vertical trim tile, the run of vertical trim tile pieces in the left part of the photo, between the mirror and the shower glass, and how that trim tile butts into the bottom of the crown?

Within the shower itself, at the top of the tiled wall, I simply see field tile on the wall. I don't see any horizontal transition/trim/pencil tile between the top of the wall field tiles and the bottom of the crown.

In your photo, I see a shower wall that is thicker than normal when compared to the bathroom walls outside the shower. They used the tile trim pieces at the left edge of the shower wall to hide the thickness of whatever is behind the shower wall tile; floated mud, added cement board, furring strips, who knows.

The sink backsplash, while still thicker than normal, does appear to be not as thick as the shower wall by maybe 1/4" to 1/2" of thickness. There is a vertical break and return in the backsplash that lines up with the left edge of the shower wall.

So it looks like the sink backsplash is a little thicker than standard. It could be that the backsplash tile is simply a thicker than standard tile. Or that it was padded out a bit for visual interest. Then the shower walls were padded out more.

Personally, I like depth in walls, I like transitional breaks from one space to another. It adds detail and shadow lines, and that bathroom has them.

Regarding the crown itself, I see fairly standard ogee crown that has been bumped out with a backer piece. The backer piece is thick enough to stand proud of the vertical trim pieces.

The backer piece could also be padded out by another backer piece. Sounds weird, but with the thickness of the shower wall compared to the regular wall, it makes sense. So, for example, the crown on the wall above the mirror is padded out with a piece of 1/2" backer. That gives you the added detail at the bottom of the crown, the added "step" in teh molding.

For example: Let's say the crown over the shower is padded out 1-1/4" total. First by a 3/4" thick piece of wood that is unseen. Then the same 1/2" thick backer that was used to pad out the crown above the mirror was applied over that 3/4" thick padding, for a total of 1-1/4".

Here's a basic drawing showing how to pad out crown. I usually add a detail to the bottom edge of the backer, but this just shows a basic square edge.

I can't think of the last time I installed crown directly to a wall. 15 years? I do this all the time. The backer gets nailed off to the studs, with the nails eventually hidden by the crown. No nail holes. The crown gets nailed off to the backer as needed. With the backer or padding, every nail placed through the crown provides positive holding power versus having to cross-nail the crown through drywall and hoping for the best.