For an SD-WAN Edge configured with an underlay BGP peer and the feature "Default Route" with the "Conditional" option is enabled under the "Advanced Settings", BGP will redistribute the default route to its neighbor only when the Edge learns an explicit default route through the overlay or underlay network.
However, customer might notice this will not work (default BGP route will still be redistributed to the underlay peer) if the edge loses the default route coming from its primary cloud Gateway (primary VCG). Screenshot shown below as example is taken from the "Route Table Dump" using the "Remote Diagnostics" in the VCO. The default route highlighted is the one we will not see if the Edge loses connection to its primary VCG
This is expected behavior. The default route (type: Cloud) that is shown in the routing table is really a system/internal route and is not considered a Cloud VPN route advertised to the Overlay from an SD-WAN peer.
The "Conditional" feature is meant for instance for when the Edge has default route in its routing table, which is advertised from a HUB Edge ("Cloud VPN" type) and the Overlay connection to that peer is lost, thus, the default route coming from that peer is withdrawn from the Edge routing table, and at the same time, the Edge will then stop redistributing the default route to its local BGP peer
For additional information on configuring this feature. Refer to this documentation