Hierarchical Chunking + Auto-Merge: Small Chunks Search Well, Big Chunks Read Well
Small chunks give precise embeddings but lack context; big chunks have complete context but diluted embeddings. Hierarchical Chunking builds multi-level indexes (2048→512→128 tokens) with an Auto-Merge algorithm: leaf nodes match precisely, and when hit density exceeds a threshold the parent node is returned to the LLM instead. HiChunk shows a 12.7% evidence recall improvement; LlamaIndex and Haystack have it built in.