Content Filter can be used only as "AND" and not as a standalone item inside Policy, why?

The new content filter lists are meant to be used as a further filter on existing categories, rather than as a blanket check on all sites. This means you can use broader word lists, with less risk of false positive, because you can control that it only applies to the categories you're concerned about. 

A school, for instance may wish to block certain keywords in some site categories, but not in news or reference sites. This allows better control over the use of this feature, for it's intended use. 

Understood.

Thanks.