The Index Converter utility determines merge vs. standalone creation based on whether the custom index is a modification of an existing OOTB index or a newly created custom index.
Q1: Merge Criteria
Merges occur when the custom index name matches or is derived from an existing OOTB index (like cqPageLucene or damAssetLucene). The utility performs a three-way merge comparing the custom OOTB index, original OOTB baseline, and new AEM Cloud Service version, extracting the customizations and merging them using the naming convention: <OOTBIndexName>-<productVersion>-custom-<customVersion>.
Standalone indexes are created when the index definition is entirely new and doesn't correspond to any OOTB index. These are renamed as: <indexName>-custom-1.
Q2: Custom Indexes vs. Merge
Creating fully custom indexes is supported but should be a last resort. Adobe recommends customizing OOTB indexes when queries operate on the same node types, as this is easier to maintain during upgrades.
Create fully custom indexes only when OOTB customization doesn't work or when indexing completely different node types. The critical rule: avoid creating custom indexes on the same node type as OOTB indexes, as this has caused performance and functional issues (source here) :
