I actually use all three sizes. First I sift through the half inch to remove the bigger chunks. What's in the screen is used for drainage layer or driveway fill. Then I sift through 1/4" to collect large planting size. What goes through is sifted through 1/8" to remove fines and collect smaller planting size. The fines I use for cuttings and driveway fill.
My sifter comes with several sized screens, but I've lost all the others because I never used them.