Why use Microsoft Word’s built-in heading styles? by Shauna Kelly

The built-in headings have special properties. Assigning an outline level to a style does not give it these properties. I do not know whether or not one based on a built-in heading carries these properties. Looking at your screen shot I do not see anything missing from the cross-reference dialog that appears in the navigation pane.

P.S. I've noticed the occasional blanking of the edit box as well.

[Edit: Upon experimentation and further reading, styles based on the built-in heading styles will not show up in the cross-reference dialog as headings even though they will show up in the Navigation Pane and Tables of Contents. See #15 of Shauna's article on cross-references.]

What's missing is the last two 'Appendix' entries, which show up in the document overview and the ToC as level 2 headings but are not picked up by the cross-references dialogue. As for using the built-in styles, that was where I started from with the 'style based on' option.