How do I add an index to a book project in Pages?

Pages does not support the ability to generate a document index. It can however, build a Table of Contents from allowed paragraph styles used in your document.

Applications that support true document indexing are MS Word, LibreOffice Writer (free), and Mellel to name a few available on macOS. There are others in the Mac App Store…

If you do a search you will see lots of references to creating an index with MS Word.

If you really want to use Pages then it is possible to create a pretty good index (not 100-percent professional formatting that a publisher would use, but close enough to be very useful) using an AppleScript. If you don't mind working a little with preexisting code to tell it what terms you want to index let me know and I'll post it. I had good results with an extensive index to a 200-page book.

SG

From the horse's mouth, a Microsoft article on how to create an index in Word, and this would also apply to current versions of Word on the Mac too.