This means that if you have more than one record type within an Object, you can now setup separate matching and merging rules. For example, in Accounts you may have Business Customers and Suppliers, and when creating a Master Record do not want to mix the record types together. By setting up a separate Target Object per record type you can specify a different Blocking Key for each one so that when the jobs are run, the records will not be matched and merged as the Blocking Key will not be the same. What this also means is that you can setup Attribute Groups for individual record types if you did not want the same merge rules to apply, or you can apply to all record types if you wish.
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