index.html should not be part of a URL that users ever see. It is a wide spread web server convention that if you want a page to show up for the directory URL, you put that page into a file called index.html. The reason that you create an index.html file is put the content at the directory URL. index.html doesn't say anything meaningful to users. The URL is always simpler and better without it.
You should never include index.html in a full absolute URL for your web site. It shouldn't be in your sitemap. It shouldn't be in any links to your site. It shouldn't be in links within your site.
- Instead of
http://example.com/index.html, use http://example.com/
- When linking on your own site using a root relative URLs, instead of
href="/index.html", use href="/"
- When linking on your own site using directory relative URLs, instead of
href="index.html" use href="./"
Google is recognizing that you have the same content on two URLs. Google knows that index.html files are meant to show content at the directory. Google is preferring to index the simpler, better URL.
You ask "Why does Google not conflate these and count them as a single page?" -- Well, Google is recognizing that those two URLs are the same page and Google is telling you which URL it chose as the one that it is going to index. Google doesn't usually index multiple URLs with the same content. See What is duplicate content and how can I avoid being penalized for it on my site?.
This does not indicate a huge problem. The worst that is going to happen is that some users see the ugly index.html in URLs. It would be better if you linked to the cleaner form and included the cleaner form in your sitemap, but it won't hurt your search engine rankings too much if you don't do it right. Google is telling you that it is taking care of the issue for you and including the cleaner version in its search index.