z-index when using ::after under element

Specifying z-index you are creating a new stacking content;

if this is done only on the child ::after pseudo-elem the parent won't establish a new stacking content and everything will work as expected.

But adding z-index on the parent element will start a new stack (which will also wrap the child-stack..).
And if you look at the first 2 points on stack rendering specification you'll see background will be rendered before other child-stacks:

Within each stacking context, the following layers are painted in back-to-front order:

1. the background and borders of the element forming the stacking context.
2. the child stacking contexts with negative stack levels (most negative first).
3. ... ...

here's an example, to clarify the different rendering behavior for nested stacking background.

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position: relative is not optional; with the default position:static, z-index has no effect.

Your div and its ::after pseudo-element are members of the same stacking context, in this case the root stacking context. The new stacking context you give the pseudo-element would be used as a reference to its children (which are non-existent), but the z-index value applies to the current stacking context. And the CSS spec dictates the following paint order for each stacking context:

Within each stacking context, the following layers are painted in back-to-front order:

1. the background and borders of the element forming the stacking context.
2. the child stacking contexts with negative stack levels (most negative first).
3. the in-flow, non-inline-level, non-positioned descendants.
4. the non-positioned floats.
5. the in-flow, inline-level, non-positioned descendants, including inline tables and inline blocks.
6. the child stacking contexts with stack level 0 and the positioned descendants with stack level 0.
7. the child stacking contexts with positive stack levels (least positive first).

Look, child stacking contexts with negative stack levels, such as your div::after are painted before the positioned descendants with stack level 0, such as the div itself. This explains the behavior you noticed.