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Vivek KidambiVivek Kidambi 

custom app development

i am looking for some guidance on using standard objects like accounts/contacts in a custom app development. Is there any downside if the design is based on custom objects? Custom app is planned to be shared using managed package down the line. Appreciate if anyone can share their experience using standard objects.

You should try to use standard objects as much as possible.  You can add standard objects (well your custom fields) to your managed package.  Read more here:

Vivek KidambiVivek Kidambi
I heard that certain standard objects are not available in certain editions and to make the app available across all editions, you either use standard objects and maintain different variations of that app, or maintain one app with custom objects.For example, Salesforce Platform or one app has restrictions on Account or Contacts usage. 
Yes, you do need to know what versions of Salesforce have which objects and you need to know what version you are targeting.
Vivek KidambiVivek Kidambi
so in a sense, going for custom objects is much safer if we don't have that clarity early in the development?