Short answer is, the search index is continually updated invisibly in the background. The only time you see any evidence at all of that activity is if you do a search right after adding a brand new book to the device, and don’t get any search results from that book.

As far as being able to highlight/clip sections, and search within them, yes, you can do that on a Kindle. See the “My Clippings” in the search results screenshot above.

As far as traditional indices or tables of contents, that depends on the book publisher. Some books I’ve seen have them, some don’t.

Pagination is handled in an interesting way. Books on the Kindle are “pre-paginated”, with “locations” instead of page numbers. These are approximate - you might be reading, and see that you’re on “location” 120-135. This is so that the entire book doesn’t have to be repaginated every time you change the text size, like on other ebook readers (eReader in particular has to do this, and it’s a pain to wait while that repagination happens). And you can jump directly to a specific location number. So that’s a cool little innovation.

Like I said, come by, and I’ll show you and hopefully answer your questions.

Textbooks typically have indices which, if done well, can be more useful than a search function. Do you have any experience with an ebook having an index? Do they dynamically rebuild the index as the book gets repaginated? Or am I just expecting too much?

Looks like I’m going to have to take you up on your offer for (another) Kindle demonstration.