Smart to ask first, because the xp thing especially is important to understand.
The basic concept of merging is that you sacrifice one or more of your towers, to add levels to another tower. You do this by clicking “upgrade” on the tower you want to improve, and then use the “merge” tab on the left.
Doing this will have a “required XP” listed. This is the amount of XP you will “lose”. You won’t ever go down in level, but the xp lost will be added to the amount you need to go up in level again. This amount can be quite significant.
For example, you currently need 60k xp more to go up a level. You do a merge where you lose 800k xp. You now need 860k xp to go up again, which means quite a bit of building without leveling.
The xp loss has to do with the “quality” of towers. If you try to upgrade an expensive tower like a flak by sacrificing a cannon tower, you will lose a lot of xp. If you use another flak, the loss will be much lower. To try out different combinations easily to see what would happen, you can use a tool like the one on my site: https://wd.neon-wonderland.com/building/mergeCalculator