I see. There are two categories of conflicts to resolve: meta conflicts (like when you rename a file to "foo" on device A and meanwhile rename it to "bar" on B) and data conflicts (i.e. the example you gave).
We will formally describe meta conflict resolution in a separate post. Because resolution for data conflicts is very application specific, we will publish an API to allow application developers to write their own conflict resolvers. Meanwhile, we will try to provide resolvers for popular file types by default.
From the end user's view, in most cases conflicts are automatically resolved without being noticed. User intervention is required if automatic resolution fails or the user wants to manually merge.