I don’t think you are missing anything, but I think the following article might clarify some things for you: Define and Maintain Custom User Data
Regarding the optimal architecture, it’s really up to you. It’s not easy to give good recommendations over a forum like this, but there are some good discussions here in our Community that could provide some insight for anybody interested in this topic:
Now, regarding your last question about Automatic Migrations, I do know it can be confusing. The explanation is that Automatic Migrations/Database Migration is a feature that depends on the Custom Database feature. By using Automatic Migrations, you are enabling a required sub-set of features (such as Login and Get User scripts) from Custom Databases but you don’t need an Enterprise plan for Automatic Migrations. You can use it with any paid subscription as documented on Pricing - Auth0. I will attach a screenshot below for a better understanding:
