Resolution:
We have log4j configuration in $AF_HOME/config/OMSServerLog4j.xml

1). By default we are using org.apache.log4j.RollingFileAppender. We can change and use org.apache.log4j.DailyRollingFileAppender. This will create daily files that will not be rotated. This will be good in cases logs rotate very fast and we want to keep information. Then it will be up to customer to move/zip/delete logs. 

2). By default we are redirecting everything to console. This means all application logs will be in catalina.out. This can create a very large log file. We can also change this by deleting the console appender.

<appender-ref ref="console"/>

3). If needed we can separate logs into different functionality. 

For example, jdbc pool:

 <appender class="org.apache.log4j.DailyRollingFileAppender" name="jdbcPoolLogFileAppender">
        <param name="File" value="${catalina.home}/logs/jdbcPool.log"/>
                <param name="encoding" value="UTF-8"/>
        <param name="DatePattern" value="'.'yyyy-MM-dd"/>
        <layout class="org.apache.log4j.PatternLayout">
            <param name="ConversionPattern" value="%d{dd MMM yyyy HH:mm:ss,SSS} %5p [%X{businessTransactionId}] [%X{orderRef}] [%X{engineName}] [%c] [%X{operation}] - %m %X{stackTrace}%n"/>
        </layout>

    </appender>

 <category name="com.tibco.aff.oms.db.datasource.impl.FOMDataSourceProxy" additivity="false">
                <priority value ="DEBUG"/>
                <appender-ref ref="jdbcPoolLogFileAppender"/>

  </category>

State machine:

  <appender class="org.apache.log4j.DailyRollingFileAppender" name="StateMachineLogFileAppender">
        <param name="File" value="${catalina.home}/logs/stateMachine.log"/>
                <param name="encoding" value="UTF-8"/>
        <param name="DatePattern" value="'.'yyyy-MM-dd"/>
        <layout class="org.apache.log4j.PatternLayout">
            <param name="ConversionPattern" value="%d{dd MMM yyyy HH:mm:ss,SSS} %5p [%X{businessTransactionId}] [%X{orderRef}] [%X{engineName}] [%c] [%X{operation}] - %m %X{stackTrace}%n"/>
        </layout>
    </appender>

     <category additivity="false" name="com.tibco.aff.oms.server.jms.orch.statemachine.MemoryCleanup">
         <priority value="INFO"/>
         <appender-ref ref="StateMachineLogFileAppender"/>
  </category>