Do you need one baggage bay per stand?
No, you can connect as many stands as you want to a single baggage bay. However it will lead to delays. So optimal number is; 5-6 medium stands (8-9 Small and 3 Large) per baggage bay.
Can you merge arriving baggage onto one belt and then split out again into multiple areas?
Yes, Tilt Trays are there for you.
Do small stands support baggage? I noticed they don’t do cleaning/catering…
They support.