Just to clarify so I'm not confusing anything, but could this be used to fuse similar materials together? as in 2 rocks into a bigger rock, 2 gems into a bigger gem, and so on...

Terrible example. It is very difficult to make a wooden bridge, with braces , etc. So they should of thought twice about using that example, I bet it's easier to make armor or weapons than a functional bridge that won't collapse. Just sayin'

That would make teleporting a great— if harsh— exfoliant.

Honestly, now that I think about it...

Could a Wizard take an empty spellbook, the raw materials to copy their spells, and use this spell to make a backup spellbook?  Especially since a spellbook is not in itself a magic item.

Can this spell make arrows and if so how many?

Would it seem reasonable to make a larger gem out of smaller ones? Essentially merging them? Or is it about reorienting & constructing things from parts rather than fusing them?

that would be up to your dm to decide

maybe less pure/less valuable diamonds at first but as you practice more you'll get better results

dnd 3.5 had a mechanic with this spell that allowed wizards that we're proficient with glassworking tools to create a golem heart from glass after a dc20 glassworking tool check

maybe something similar for all valuable items?

Can this be used in the making of construct?

Soylent green is people!

Cheaper option 
Visit a Mine and use fabricate to extract/create bars or blocks of materials as needed 

Quote from JayZippo >>

Terrible example. It is very difficult to make a wooden bridge, with braces , etc. So they should of thought twice about using that example, I bet it's easier to make armor or weapons than a functional bridge that won't collapse. Just sayin'

Depends if you're trying to create a proper structure to endure for years or just something that'll support the party going across it a few times.

About 750gp according to the rules for crafting. The material cost is half of the retail price. The rest you pay for in time as it takes weeks to make one single set of plate.

Honestly being able to cut down the crafting time that much is still well worth the trouble of casting this spell. Mass producing and selling armor is a quick way to make a crapload of money, fast.

Time to make a nuclear bomb y'all?

It's also limited by RAW. Your DM allowed this spell to be much more powerful; your usage of it in your example hinged on homebrew revisions. This spell is still nice, but it's unusable in combat.

You thought this spell was a headache before DM's, watch out with Wizards with Modify Spell (latest UA playtest), who can add the Ritual tag to this bad boy for FREE every day with a Ritual casting of Modify Spell.

They can then cast Fabricate 50+ times a day, easily. Much more if they push it.

Want to build the shell of a castle in stone quarry? Give me a few days.

Modify Spell + Fabricate = Print Money

As for my game, I embrace stuff like this. I'll let the player destroy the local economy for short-term gains, and then have to live with the fallout. Any time the player writes content for me, that's a win. :-P

There is nothing more satisfying as a DM than watching players inadvertently create plot points that work with the story.

is one proficent with smithing tools

Make a portal to the quasi-elemental plane of minerals. Get a bunch of diamonds. Use this to cut and polish them. Now you have free diamonds for your cloning lab.

I don’t know about Jewelry but I see no reason other than an arbitrary ruling that you couldn’t create basic weapons and armor.

Thoughts on using this to create adamantine weapons/armor?