This is actually my favorite style of documentation. Just hit me over the head with the whole thing, I can take it.

Plus, in my experience when I make a separate user manual... a lot fewer people read it.

Yes, but it starts with an overview, table of contents, and quickstart, so I see no downsides to that approach and lots of upsides.

Most repositories try to create a poor man’s wiki inside of their README. It’s better this way until that problem is solved.

The other style I like is a single sentence with a single link to the actual wiki.