Node created date gets updated when node is updated

This is how it works because the default system-of-record for the migration is the source. That is, each time an item is reimported, the entire destination-side copy of it is replaced as if the item were being imported for the first time - no changes made on the destination side are preserved (otherwise, you would have an amalgam of source-side data and destination-side data).

What you can do to preserve select fields is to (if the item has been previously imported) explicitly load the destination-side data you want to keep and map it. E.g., map your 'created' field from 'custom_created', and in prepareRow if the destid1 field is set in $row, query the existing created value and set it in $row->custom_created.

I have a migration that wants to both import new items and update previously-imported ones. I use the --update flag to migrate-import to do this. I can't use DESTINATION system-of-record because that won't import new items.

Here's another method that prevents Migrate from changing the created date on existing nodes:

/**
 * Implements hook_node_presave().
 */
function MYMODULE_node_presave($node) {
  // We don't want to change the "created" date.
  if (isset($node->original)) {
    $node->created = $node->original->created;
  }
}

Hard to understand as technically if the entity is being "updated" the Updated On field should have the date/time information of the migration and not the Post Date.

Could someone help understand how exact to use code in #3

Thanks