For Fuzzy search, do we need to setup a Fuzzy Match Rule? or its out of the box without a need for L3 change?
No Fuzzy rule is required. You don't need to do any L3 change. The way it works today, it's kind of the static mechanism. It uses the Levenshtein distance algorithm. And specifically, you need to be aware of three use cases. So for the search, in terms of one to two characters long, it will use exact match. So basically, Fuzzy Search for very short tokens that will turn into exact match.
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