I wrote up how we're putting documentation files in git in Manual:Coding_conventions [1]. It's nothing new, it mentions README.md, .txt files, etc.
I would prefer extensions on files like COPYING and HISTORY, as it's friendlier for Windows users and if the file actually uses Markdown or wikitext markup it lets Diffusion, GitHub, and syntax highlighters do a better job. I filed T116690 "Give text files in Git correct extensions".
I noticed two conventions for the extension of wikitext files in git: .mediawiki and .wiki, e.g. tests/browser/README.mediawiki and extensions/Wikibase/docs/lua.wiki. GitHub will render both kinds as MediaWiki wikitext (of course it only implements a subset); it seems Phabricator doesn't recognize either extension. I think we should be consistent. .mediawiki is more precise (it's not MoinMoin or IkeWiki markup) while .wiki is shorter. Maybe there are other arguments for one extension over the other.
Thanks for any thoughts!
[1] https://www.mediawiki.org/wiki/Manual:Coding_conventions#Text_documents