Condensation in the building envelope can reduce the effectiveness of insulation and even cause rot, peeling paint, buckled siding, spalling and efflorescence on brick and concrete walls, mould growth and other problems.
As absorbent insulation becomes wet, its thermal value drops, thereby intensifying the problem and moving the dew point toward the source of the flow of moisture (i.e. toward the interior surface of the wall).
The frost and condensation end up on the backside of the sheathing, not at the original dew point location (Building Science Insights; BSI-049: Confusion About Diffusion; by Joseph Lstiburek; 2011)