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Nothing is "bad" about custom objects, when there is a good reason to use them. If standard objects do what you need to, they're probably the way to go - standard functionality is part of what you're paying for Salesforce to get.
Here's an article on the topic: https://roycon.com/salesforce-custom-objects-5-reasons-you-shouldnt-use-them-and-the-one-time-you-should/
Really depends. Basically every customer that’s mature uses custom objects. For sales use cases I always recommend to use standard objects first especially account, contact, and opportunity because so many other features rely on these objects. If you replicate a standard object with some weird custom object there will come a point when the client realizes they can’t turn on something important because of what you did. Also I don’t know if I agree on the managed package point unless it’s a well supported package. Some managed packages aren’t scalable.