I like to think of it as, the higher up you go, the more situations need balance. If you're playing any stakes and only raise AA/KK/AK UTG then you have a real problem. At 25nl though, you dont exactly need a balanced "call flop, raise turn" range for instance. Balance can be applied to any line basically, but at lower levels you only need to pick the most obvious ones.

Merging is when your range includes hands other than very strong and weak/draws. If you look back up as Oskars example, a merged range might be raising flop with any KX hand, not just AK. Now if your opponent holds something like KT its no longer a WA/WB situation for him, making his decisions more difficult.