There are two concepts:
1) Input schema: This is the schema used during publishing of events to EventGrid. This is specified as part of topic or domain creation.
2) Output or delivery schema: This is the schema used when EventGrid delivers events to your event-subscription endpoint. This is specified as part of an event subscription creation.
You would use "Custom Input Schema" for 2) above only in the scenario where you are using a custom schema to publish events to EventGrid AND you want to retain that schema on the way out when it reaches your event subscription endpoint. In the scenario you have described above, you are receiving Storage events which are published in standard EventGrid event schema, and hence they cannot be converted to a custom schema on the way out.