While the general rule is that on local flights you stay upwind of the airfield, more specifically the position at release should be parallel to the active runway with a line roughly extending from the circuit entry point on the towplane's side of the field about 1.5 miles upwind on a 2000 foot tow. This is point A in the example above. A 3000 foot tow would take you roughly 3 miles upwind. Low-time pilots should not go further than the 3000 foot tow distance upwind regardless of how high they may soar primarily because it is easy for them to lose their orientation with respect to the airfield. All pilots should fly in the indicated glider traffic area on local flights, with experienced pilots allowed to range further upwind according to their orientation abilities. However in all cases the gliders should be kept within direct gliding range of the airfield.
While experienced pilots often have the skill to deal with flying into headwinds, and make better use of lift, there are other safety issues when flying downwind. The first is the example set to the low-time pilots, who might blindly follow the experienced ones and get into situations they haven't the skills to get out of. The second issue is related to glider and towplane traffic in the vicinity of the airfield.
Many flights that end up downwind of the airfield result in odd circuit entries at the very least, and some unexpected landouts. Both of these consequences lower the margin of safety. Further to this, gliders in the airspace overhead the field, and on the towplane circuit side greatly increase the risk of collisions and near misses with climbing and descending towplane traffic.
All pilots should stay in the recommended glider traffic areas on local flights without exception.