What's the difference between creating a mission with military/civilian objectives and only using custom objectives? Will some functionality not work properly if you only use custom objectives (insurgency for instance)?

Main reason I'm asking this is because I'm thinking of creating a mission using only custom objectives to get more control over the objectives. Using mil/civ modules, the north west part of Altis is mostly empty, while the south west part gets very crowded.

What about the mil logistics module? When you put the reinforcements on dynamic, does it also check custom objectives when deciding where to insert?

Yes if size and priority fits its demands.