Per my knowledge, the subsearch result would be acted as parameter to the main search. In the distributed search, would the subsearch result first be consolidated in the search head and then further distributed to the search peer? Thanks!
Yes, it is exactly as you describe. The result is consolidated on the search head.
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Look at the job inspector it will give you some insight as to how the sub search works.
When distributed to the search peer, how do the results send out? via knowledge bundle?