I have a shapefile consisting of many polygons, and I would like to merge them when they touch each other (see red lines below).
I've been trying quite a few tools in ArcMap 10.7 such as Dissolve, but they don't seem to do what I want exactly. The Aggregate Polygons in the coverage toolbox pops up in my search, but I can't actually click the toolbox, perhaps I don't have access to this in ArcMap.
Alternatively, I'd be content if I could merge all polygons separated by <1000m (in the example picture, all 'cells' are 1 square kilometers, so in this case I would end up with one large polygon except for the two blocks in the top-left), which I tried to do with the Aggregate Polygon tool in the Cartography toolbox, but the output shapefile is identical to the input.

