A user-edited template overrides the file, permanently

There is no merge and no notification — the database copy wins entirely, and the only signal is a “Customized” label in an editor screen nobody opens.

$ wp post list --post_type=wp_template 
    --fields=post_name,post_modified --format=table
+-----------+---------------------+
| single    | 2022-03-14 09:41:02 |
| archive   | 2022-01-30 16:02:11 |

# two of eleven templates are customised. the other nine
# still track the theme files.

# and the reset, which DELETES the post:
$ wp post delete <id> --force

Deleting the post is the reset and it is irreversible, so a customisation somebody spent an afternoon on disappears with no undo. On a client site the honest workflow is to pull the customised template out of the database, commit it to the theme, and then reset — which keeps the change and puts it under review.