When using a full-page theme app extension, what does the merchant UX look like? For example, do merchants need to create a new page in Shopify and then, using the theme editor, add our theme block to that blank page, or is the flow different?
As far as I’m aware, there’s no specific “full page” theme app extension. If you have an app block that’s intended to be used on it’s own separate page, this would probably work as you described where the merchant needs to create a separate page template to add the app block to that template and then assign it to a page.
If you’re referring to something like a full page customer account extension (https://shopify.dev/docs/apps/build/customer-accounts/full-page-extensions) then the extension itself is a page that get’s added, no need for the merchant to create any sort of page separately. The only thing the merchant would need to do is add the page to their customer account navigation menu, but Shopify will automatically prompt them to do so.