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I'm using Word 2016 (desktop) on a Windows 10 64-bit system, but this article applies to earlier versions. 365's browser edition displays numbered lists and offers a few basic settings. However, you can't apply either option discussed in this article using the browser. For your convenience, you can download the sample demonstration .docx or .doc file.
Even if you want only minor customizations, though, you may want a list style in your template. So after you have applied the built-in number scheme and with the cursor still in  the first heading 1, go back to the list gallery and click Define new List Style (name the list style) > Format  > Numbering.  The dialog will show all the settings of the current list (where the cursor is) except that no headings will be linked to the numbering levels.  Customize the settings and add the heading links. 

I have a word document with a table of 6 exact cells on a full page table. In those cell areas I have been printing tickets with a list and a mail merge and updating labels. I call to an excel list of 1-2000 and then I generate all the pages through the Finish and Merge option. This all works perfect. I get 2000 individually numbered tickets to print...however...I then have six tickets printed on a page of paper with ticket numbers 1, 2, 3, 4, 5 ,6 then the next page has 7,8,9,10,11,12. This is fine but I then have to cut and stack these tickets in groups of six and at that point none of the numbering is sequential. The tickets are basically random.
Thanks very much for your prompt reply, which reassured me that I was on the right path. From having read various Help topics, I suspected that I'd have to use an Excel data source for the numbers. Fortunately, my knowledge of Excel was good enough to know about the drag and drop facility to create automatic sequential numbering, so the data source creation was easy. In the end, it was the mail merge (no surprises?) which proved a tad tricky, but I got there in the end. I've used MM many times and quite happily in Word documents, but for Publisher label format, it was of course a bit different. The important bit that I had to discover for myself was the significance of, after getting to the Print stage, going into Print options, to Publication & Paper Settings, and selecting Multiple Pages per Sheet (& in my case, also "Single-sided" cos my default of duplex printing had come up). But TA-DA!  All is fine now. Thanks very much again.
Whenever you begin a new project, clear the settings out. There's a couple ways to do this. You can choose Tools Customize, and hit Reset Usage Data. But more than likely, you've forgotten to do that like I do. So, instead, when you go to use a bulleted or numbered list, go ahead and reset them all. I did not do anything special to show you the screenshot below. I just opened Word 2003, and hit Format Bullets and Numbering, and there it was, already like it is in the picture. Doesn't look like the default, does it? Nope!
When I base heading 2 on heading 1, formatting reverts to mimic heading 1 exactly and I cannot then reformat heading 2 to second tier numbering using the modify dialogue box as once again it is only recognising first tier numbering. The heading 2 that I am using is currently based on heading 2 from the original document and has been re-labelled "heading 2 VE".    
CK Note: Word 2007 - 2013 interface has an different automatic numbering scheme which I have been told is much less subject to corruption. Microsoft Word 2010 Bible by Herb Tyson, MVP. However numbering is still very imperfect in these later versions. I still recommend following Shauna Kelly's step-by-step instructions (see above) if setting up numbering in a template or in a document likely to be heavily edited. If you start without doing this and end up with "spaghetti numbering," fixing it will be a very large chore!
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