wat-the-wat.js

// This succesfully merges the supplied object with the state object
function builder(){
    let state = {};
    return {
        options: function (){
            state = mergeFragment('opts', state, optionsFragment(...arguments));
        },
        product: function(){
            return state;
        }
    }
}


// Instead of correctly updating state, this sets its value to `Function f1` 
function builder(){
    let state = {};
    return {
        options: () => {
            state = mergeFragment('opts', state, optionsFragment(...arguments));
        },
        product: () => {
            return state;
        }
    }
}

Have you considered that Arrow functions do not have their own arguments object. so in the second case, arguments will reference the arguments of the enclosing scope (not sure what you mean by function f1), I would expect it references arguments of the builder function.