Conflict files can occur when two or more users are editing the same files, or when they are changed before being able to be completely synced.
The modifications are not merged as CloudStor does not change a user's files in anyway. This results in two versions of the file being created, the one that was synced to CloudStor first and the one you had modified on your computer.
This allows you to compare the file changes by hand and manually merge the files together and then remove the conflict files once you are sure you haven't lost any of your changes.
For more information, you can visit ownCloud's architecture documentation for the desktop sync client: Conflicts and Conflict Cases