I would also argue it's more useful at lower levels of play. Fewer low CR creatures are immune or resistant to fear unless they have PC levels (meaning the fear half of feature is actually meaningful), and the amount of time it'd take for it to catch up is slightly quicker (though I forgot to calculate the impact of the Duelist fighting style in my tests, and it'd certainly wouldn't be too great of a boost for GWFers and maybe TWFers)
Would this be accurate, or is there reason to assume it's not too useful at low level play? I'm not arguing it's overpowered, mostly just trying to find more cases where it's beneficial
(thinks) Your analysis sounds plausible to me. The one countervailing factor I can think of that at low levels, with only one attack, your bonus damage is less likely to get applied.
Let's run some quick numbers. A fourth level Aasimar Paladin with Defense style, a longsword and Str 18 (we'll say he's aiming for GWM at 8th level but chose to prioritize Str) will do 6.18 points per round against AC 13 (e.g. Orc), or 4.90 against AC 16 (e.g. Mind Flayer). If he activates his radiant/necrotic damage, that increases to 8.98 against AC 13 (45% increase) and 7.10 against AC 16 (also 45% increase), which means it takes between two and three rounds to show a profit. At fifth level, with two attacks and prof +3 and a more powerful Necrotic Shroud, he'd be going from 13.20 to 17.89 damage against AC 13 (36% increase), and from 10.65 to 14.85 against AC 16 (39% increase), so it takes three rounds to show a profit. At 12th level, with prof +4, Str 20, GWM and a greatsword, and Improved Divine Smite plus a 12-HP Necrotic Shroud, he'd be going from 32.95 to 43.03 points of damage against AC 13 (31% increase) and from 25 to 35.17 points of damage against AC 16 (41% increase). So even at high level, it will still take 2-3 rounds to pay off for him, but the dropoff isn't as bad as you might expect.
BTW, GWM turns out to be fairly negligible in all these cases, and the 12th level Paladin with Necrotic Shroud up is actually better off against AC 16 if he stops power-attacking. Even against AC 13, power attacking only boosts damage for him from 29.20 to 32.95 (13% increase) without the shroud, or from 40.93 to 43.03 with the shroud (5% increase).
Anyway, put that together with flametitan's observations on fear, and I find it plausible that Necrotic Shroud is more useful at low levels of play, but the difference is smaller than I would have expected.
Also consider BTW that the above DPR analysis is a bit simplistic and therefore conservative. Against an actual AC 16 Mind Flayer, there's some benefit to minimizing the number of rounds you spend within 60' of him (because Mind Blast, etc.), so it might actually make sense for the paladin to hang back for a round and activate Necrotic Shroud before wading in for the kill. Necrotic Shroud is therefore somewhat better than the above numbers estimate.
Still, I'm confident that the ability is in no way overpowered. Call it "balanced" or "unexciting," whichever more accurately reflects your mindset.
