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What is the difference between Libraries and .dgn (Default) under the OpenRoads Standards in the Explorer window?
The Libraries leaf contains all of the Standards provided in the linked dgnlibs.
The location of these dgnlibs can be found by going to File > Settings > Configuration > Configuration Variables > CIVIL_CONTENTMANAGEMENTDGNLIBLIST.
If you want to make a change that will be reflected across all future dgns linked to a specific dgnlib, you will want to make the edits inside of the dgnlib.
The .dgn (Default) leaf contains the Standards that reside within that particular dgn. When you use a Standard from a Library, it is placed within the dgn. From there, you can make modifications to the Standard that will only affect the dgn, not the dgnlib.