Here's mine (unfinished in this photo) It is probably about 26-27" from sink. DW to left and glasses go in top, silverware in drawer resting on counter, plates below.

So grade your countertop so water moves towards the sink.

When I had my MBR Marble finally fabricated, I wanted a routed edge around the sink. I wanted my faucets to sit in the route.

My faucets are Kohler 'Alterna' (discontinued) that are a "waterfall" type. Unfortunately, when on to a tiny drip, surface tension takes the water back under the faucet, only to run all over the counters, which are level. Putting in that route keeps that water heading into the sink.

My fabricator's first suggestion that when polished, it could be miniscule-y graded towards the sink. They didn't have the router. Evidently what I wanted is extremely custom. But, I didn't want the grade, I wanted my route. So? They figured it out somehow.

Enough about me. I like the look of cabinets on the counter, too. I'd also caulk around the base of the cabinet so water couldn't get underneath and mold and rot, etc.

Mine is 28" from the sink.

No problems at all, but that's a lot farther away than 18". I'm not sure I'd be as concerned about the water issue as I would about feeling totally cramped around the sink. I just put my large cutting board on end at 18" from the sink and pretended to work. I don't think I'd be happy with a space that small. YMMV. Could you mock it up around your current sink to see how it feels to you?

24" away from the sink would be about as close as I'd be comfortable with. And I think runnels on that side would really help with any potential water damage. Caulk, of course, but plan for any splashes to drain back towards the sink.

If possible I would want more than 18 inches on both sides of the sink. That said I have painted wainscot for a back-splash that gets splashed several times a day. Also at times water sits on the counter around the faucet and against the BS, 4+ yrs and no problems.

Mine is about 18" but my kitchen is tiny. Haven't lived there yet so I have yet to determine if splash will be a factor.

Placing wood cabinets on the countertop is simply a bad idea.
However, placing cabinets 3cm above the countertop is a GREAT idea. Have your countertop installer place an additional piece of countertop under each wall cabinet to act as a matching, waterproof "foot" for your cabinet. For the especially cost-conscience, use sections of 4" tall backsplash tipped on their side. Three linear feet of 4" x 1 1/4" backsplash will cost the same as only ONE square foot of countertop. If the height difference between adjacent wall cabinets is an issue, raise ALL your wall cabinets 3cm. The difference will not be noticed and you can easily avoid any water damage (and caulk!).

When I've thought about areas of wood being in contact with a counter, it's always been washing the counter that I've been concerned about.

Mine is probably 22 inches or so. Although we just had new cabinetry installed, the old cabinets were in the same position so we've lived with that configuration for 11 years and have never once had an issue with it.

A few houses ago, I had a cabinet down the counter. It was about 24-25.5" away from the sink. It worked great. I never had issues with water damage on any of my cabinets.

18" is a tad close, but as long as you're not slapping water all over the place and keep your wood wiped dry when it gets wet, you'll be fine.

Think of all the mantle hoods with wood so close to a pro range! Now that I'd be worried about.