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ArcMap's default labeling conflict detection rules are set to high for all annotation classes. This setting affects how annotation is displayed when two or more annotation classes overlap in space. To detect the conflict, the label engine must execute an additional spatial query to build a bitmap in memory and make the necessary adjustments to resolve the conflict.
If the annotation has been correctly placed in advance, this additional query is not required, which affects the general performance and scalability of the relational database.
Users who require the conflict detection rules for cartography may not want to disable this option. Once the rules are disabled, potentially a significant number of spatial queries will be eliminated from the ArcSDE instance.