Why Component.tsx and index.tsx instead of just one or the other?

Using index.tsx

Pros

Non-redundant imports such as import {Button} from Button.

Cons

Harder to identify which file is which.
- At the IDE, even with the tabs showing in smaller letter with folder the file is in, this only results in the tabs being unnecessarily larger.
- While doing fuzzy finding, you have to go looking for the path because almost all the files have the same name.

Using Component.tsx

Pros

Cleaner tabs as there are no reason to show the folder
More intuitive fuzzy finding.
It makes sense. If you are editing a button component,nothing more appropriate than the file being named Button.

Cons

Redundant imports such as import {Button} from Button/Button .

Using both index.tsx and Component.tsx

Pros

The component stays on the folder called Component, and the index of the folder called index. This also makes exporting types and utils by the index more natural, since now it's responsibility is to be the index of the folder, and not to be a component.
More "modular" feeling of the folder, as you can import everything you need from that "module" (be it a component, a hook/provider or whatever) from the same file.
All the pros of using index.tsx.
All the pros of using Component.tsx.

Cons

The IDE will suggest two exports (index.ts and Component.tsx), which can be confusing.

Conclusion

Using a combination of both keeps the pros and has (IMO) the lesser of the cons, so it is an easy choice.