if you have a setup where you have a folder for chds and one for the rom archives, you need to setup 2 rompaths like
c:\mame\roms;c:\mame\chds
If you have just one folder which holds subfolders for chds and also contains archives for the roms, you only need 1 rompath like
c:\mame\roms
Keep the storing method in mind: rompath\setname\file 1... file n and rompath\setname.zip (or .7z) holding file 1 ... file n.
Chds are stored decompressed (they are compressed containers on their own), so this follows the 1st method e.g. c:\mame\roms\area51\area51.chd
and roms are normally kept in archives, so this follows 2nd method: c:\mame\roms\area51.zip
Using patterns as described before is for more complex rompath setups....
The difference between standalone and nonmerged is actually that "standalone" is really a standalone representation of a set, i.e. you only need that one archive (and maybe chds) and can it with MAME. Nonmerged had that same idea nearly 30 years ago

but in the meantime MAME added bios and device dependencies...so they are not included. For clrmame, I actually killed nonmerged before since it doesn't really make that much sense since it's something in the middle...not really standalone....but a MAMEDev convinced me to bring it back for some other purposes.....