could you please help, How to make a decision on creating a stand alone PowerApps app or customize SP List form if data source is SP list?
It all depends on what you are trying to do. If you want to stay in the context of the list itself then use a customized list form. But if you want to use it on a mobile device or as a standalone application then create an app.
What if the design is complex or might require to change display mode of controls that might not allow user to update an item when click on Edit - should it be recommended to be customized as list form? Or how such scenario can be leveraged in SP List form?
None of the factors you mention are either easier or harder using a customized list form vs an app. Controlling Edits could be done in a Customized List form by creating a custom form to load OnEdit. But that won't really provide security. Anyone with access to the list can create their own app to edit the list instead of using the form.