So, first of all, I don't think there's really a correct catch all option between downsmash and side b, especially against spacies. There are going to be situations where side b will be better like when they will be out of hitstun before they hit the ground, or are farther away from you where you won't be able to position yourself quickly enough to downsmash. Also, I just want to note that like half of wolf moves combo in to flash at kill percents on spacies, and if you're good at shortening it's incredibly easy to hit confirm in to it for a guaranteed kill. Just to give examples, strong fair, uptilt, upthrow, and dtilt can all combo in to flash at certain percents where downsmash would have no chance of catching them.
That said, downsmash is definitely going to be better in situations where the other guy is at like 50% and you shined them near the side of the stage and don't have time to extend your combo to get more damage but you can easily set up an edgeguard situation. It's especially good if they don't have their DI ready, but if they do DI the downsmash up, it can be pretty hard to get the edgeguard and you'll probably have to go for a hard read.
To respond to Oksas, I really like the idea of doing invincible upairs since upair covers so much space. The other ways that you edgeguard a fox are waiting on stage with a downsmash if you read the side b since it covers very low, reverse upsmash, or going out with a bair. Invincible bairs are great and wolf has very good aerial mobility so doing it off the ledge with him is amazing. If you think Fox is going to do an up b Wolf can get out there to intercept him before he even finishes charging with a bair. I really think that if you have the time going out to meet Fox if your spacing is on point is the best way to edgeguard him. Also, most of the time when a spacie is offstage they're going to be holding in to try to stay as close to the stage as possible to hopefully not die if they get hit. That's where shine bair offstage comes in, which is also really really good. Oh right, and if you're on stage it's also often worth firing a laser to cover the side b towards the stage, like Falco likes to do.