If I have a project directory that looks like the following:

/
    custom_assets
        File1.txt
    generic_assets
        File2.txt

Is there a node http server implementation that would allow me to host both directories from the same root url?

For example:

http://localhost/File1.txt

Or

http://localhost/File2.txt

Almost like as if the two directories were merged.

ExpressJS which is a popular node web application framework can do it. Using two static middlewares should do the trick.

Your code should look like this:

app.use(express.static(__dirname + '/custom_assets'));
app.use(express.static(__dirname + '/generic_assets'));