Alternate keys can be used for data integration purposes as well as deduplication and uniqueness validation. This post makes a special focus only on how adding an alternante key can help you keep your Customer Engagement instance data clean and avoid duplicates.

Deduplication with duplicate detection rules vs alternate keys

1. Duplicate detection rules is an amazing feature which helps you set rules on your instance entity fields. It generates an alert popup whenever a user tries to save after a create or update operation if it meets a detection rule (for example creating a contact by filling in emailaddress1 with a value that already exists in the same field on another contact record will generate an alert popup if an exact match rule on contact emailaddress1 is published). Please check out this post for more details about Duplicate Detection Rules
2. Obviously Duplicate detection rules DO NOT prevent users from creating duplicates, it simply shows an alert that can be ignored.
3. Alternate keys DO NOT allow users to save if a duplicate is detected (2 records having the same value in the alternate key field)
4. You can have up to 5 maximum alternante keys per entity
5. You can have up to 5 maximum duplicate detection rules per entity
6. System must first validate that alternate key is supported by the platform before it can be used
7. Alternate keys fields must not have field-security level activated
8. Data within the field should not contain any of the following special character (still work for deduplication but not for data integration)
   

   < > * % & : \\

9. Only the following attributes can be used in alternate key definitions

How to add a new alternate key?

Another dedicated post explains how to create an alternate key step by step here.

More details on this Microsoft docs link