@Shades: They only ever use the one you tell them to, or their default. No automatic switching exists as of time of writing in yet another companion AI downgrade from much older BGS games.

Huh, I thought Sarah default ammo was the same as Vasco's, also when I gave her and Vasco some Equinox weapons without equipping them, and when I moved any weapon back to my inventory, they automatically equipped that Equinox weapon, and if I unequipped that weapon Sarah was then just using her fists, tried it multiple times. So their default weapon can be erased and make them fists only. Dunno about Vasco, haven't messed with him that much.

What kind of logic do they use to choose a weapon if I give them several? I mean, I dont want them to do anything stupid if I dont micromanage their weapons but I want them to change according to range and weapon quality.

You can give them any weapon you want, but Vasco can only use the built-in he already has

Can companions use upgraded weapons of the same type?

And this is why it says “default” multiple times. You can see the custom weapon you gave, but for example Vasco can't use custom weapons, only the built-in default weapon it has, and you can't see what it is. I spent a lot of time trying to search for this info and it seems no one has mentioned it anywhere, so it may be useful for people who accidentally looted their companion and can't figure out what ammo to give them back.

You can give them a different weapon and ammo for it. Equip it for them from the trading screen. Seems they are not using that ammo either.