I am after a device that can control two power paths and switch between them seamlessly. The highest priority path is the 24Vdc derived from the AC-to-DC power supply. If this fails then it has to switch to the 24Vdc battery bank. The switching current can be as high as 25A maximum.
Although not specifically mentioned in the data sheet the selection table on the website tells that the "Typical current capability" is 5A. I thought with an external MOSFET it should be able to handle more current based on the MOSFET selected.
Why is the typical current capability of 5A mentioned is to do with MOSFET driver capability.
Your understanding is correct. Since the MOSFETs are external, solution will be able to handle more current based on the MOSFET selected. The 5A number that you mentioned is there because this device works with P-channel MOSFETs which have high Rdson. High Rdson results in lower current carrying capability. If you are able to find P-channel MOSFETs with lower Rdson than what is shown in the datasheet's typical application, you can use them in the power path, use LTC4418 as a controller and you can get higher channel current. Current carrying limitations are there because of P-channel FETs and not because of LTC4418.