You probably already know about Napier Quarter. If you don't, you should. The tiny wine bar and cafe in Fitzroy's backstreets has been on northsiders' essentials list since opening in 2016. Its thick crust of rye bread loaded with dijon mayonnaise, premium Olasagasti anchovies, boiled egg and salsa verde has been haunting Instagram feeds since then. For good reason. It's possibly Melbourne's greatest breakfast and bar snack in one, as good with an espresso as with a gently fizzing pet nat.

So what's new? Why are we here? New head chef Eileen Horsnell is why, although some will remember that Horsnell was actually Napier's original chef. That rye toast? Her recipe. But after six months she headed off to investigate fine dining at Lume with chef Shaun Quade. With Quade now LA-bound, Horsnell has returned to cook the food she loves best and it's turned this already excellent pocket rocket into one of the Melbourne's nicest places to eat.

Part of that comes down to a mighty trio all on the same page. Horsnell worked with owner Daniel Lewis at his Brisbane restaurant, Pearl, and Lewis' cousin-in-law, Simon Benjamin, sold out of Bar Lourinha to get completely on board here last year. None is fussed by grandeur, but all are obsessed by the good stuff.

The blackboard offers the first clues that Napier has a sustainability bent that you won't hear about, but will taste. Behold a cocktail list of death row classics: martinis, negronis and spritzes made with Rondo, that grippy rhubarb vermouth. If you're between drinks, they'll throw an intensely refreshing lemon verbena fizz in your glass, or delicately bubbled Jauma chenin if not.

It's a largely Australian list dipping a toe into the old world, and while it gives gives more time to the frontier winemakers, it's a tried and tested batch, with richer whites served slightly warmer and Xavier Goodridge pinot noir dropped properly chilled.

Decor amounts to produce artfully piled near the kitchen – partly as still life, partly by necessity. Napier Quarter is tiny, a beautiful bluestone on a leafy corner where the traffic is 50-50 pushbikes and cars. The handful of metal tables and chairs flanking its exterior are built for a couple of wines and two dishes at a push, making dinner a leisurely ride.

Inside, a street-facing bench does brunch and singles, the tall communal table would be the only way to eat here with more than four, and leather-clad two-tops require negotiation with neighbours to access. It's cosy, and low-lit in a way that does your face a lot of favours and your food pics none.

Horsnell has spent the past two years as two-hatted Lume's head chef, fermenting abalone liver garums and crafting Quade's theatrical tricks, such as a "camembert" made from cauliflower. It's as exciting as you think that she's unleashing her powers on wine-bar food that maxes out at $35 a main. Better still, she doesn't need rotary evaporators to do it.

Horsnell's surprises hit like sneak assassins. Her dishes read and even look familiar, but often get tweaks that speak of an innate gift for reading food. Her coarse, rich parfait of Great Ocean Road duck livers gets scythed by fermented rhubarb, sweetened with its own reduced liquor. Who knew?

See also the ever-evolving grain salad. One night, barley and lentils are mixed with both fresh and gently pickled cucumbers, fragrant amaranth leaves and spoonfuls of fresh ricotta. A blizzard of fresh horseradish gives the whole lot serious vim.

A formula of reliable snacks backed by a rotating roast, salad, pasta and larder treat of the day gives a tight carte serious legs. Pipis might come tangled in tagliatelle pinging with meyer lemon, chilli and funky shavings of bottarga (salted fish roe). A hunk of lamb shoulder is cooked until its skin has crackled and meat gives way at a poke. Horsnell's sardines are sweetly soused, soft and spiky with sherry vinegar, sugar pops from currants and tangles of fennel. A summer tomato salad is at peak acid, so gets grounded with long melting curls of cured and lightly smoked lardo.

If you can't gluten and won't animal, it's far from unhappy if you have to settle for those grain salads (currently a carrot situation), or eating soft burrata with expertly pickled zucchini.

Napier Quarter didn't need to get any better. Its small crew engages like the best in the game. You know they've nailed the neighbourhood pitch when you've got a shoeless yogi sipping rosé between two suits with collars freed and a couple dressed up for date night. But it has got better.

Looking at wine bar staples through Horsnell's lens is refreshing. Doing it somewhere that feels like old-school Melbourne, where they're not afraid to serve a perfect fudgy brownie with tangy vanilla labna as dessert? Doubly so. More of this.