Is better use modular and procedural content becouse you can build tons and tons of content realy fast so at the end is better use modular that build all in 3D software. And after in gameplay you can script evrething you want to do with different part of the modular structure to make it customazible in game. Yeah the performance is changing but you make more content in less time. Is like the coise to use C++ our Blueprints. If you know both you usualy use blueprint beceouse they are faster and you can easy found and correct bugs and implemente new feature. However making all in 3D software and all in C++ is better for performance but you need 10x more people to achive the same end result in terms of content.
Aniway all biggest open world games was made by modular and procedural content.
About the conversion is usefull if you dont need to modify the model durning the gameplay our changing basic strucutre. So after you build a template example a empty house is better save all in 1 static mesh but if you need to access to the doors to make them oppen you need that door not be in the static mesh. So all you need be static is better to convert in single static mesh, all you need to be Dynamic you need to place it as different objects. And yes in terms of performance is a good coise to make this operation.