In a Package diagram, a Package Merge indicates a relationship between two Packages whereby the contents of the target Package are merged with those of the source Package. Private contents of a target Package are not merged. The applicability of a Package Merge addresses any situation where multiple packages contain identically-named elements, representing the same thing. A Package Merge merges all matching elements across its merged Packages, along with their relationships and behaviors. Note that a Package Merge essentially performs generalizations and redefinitions of all matching elements, but the merged Packages and their independent element representations still exist and are not affected.

The Package Merge serves a graphical purpose in Enterprise Architect, but creates an ordered Package relationship applied to related Packages (which can be seen under the Link tab in the Package's Properties dialog). Such relationships can be reflected in XMI exports or Enterprise Architect Automation Interface scripts for code generation or other Model Driven Architecture (MDA) interests. 

Package Merge relationships are useful to reflect situations where existing architectures contain functionalities involving like elements, which are merged in a developing architecture. Merging doesn't affect the merged objects, and supports the common situation of product progression. 

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OMG UML Specification

The OMG UML specification (UML Superstructure Specification, v2.0, p. 101) states:

"A package merge is a relationship between two packages, where the contents of the target package (the one pointed at) is merged with the contents of the source package through specialization and redefinition, where applicable. This is a mechanism that should be used when elements of the same name are intended to represent the same concept, regardless of the package in which they are defined. A merging package will take elements of the same kind with the same name from one or more packages and merge them together into a single element using generalization and redefinitions. It should be noted that a package merge can be viewed as a short-hand way of explicitly defining those generalizations and redefinitions. The merged packages are still available, and the elements in those packages can be separately qualified. From an XMI point of view, it is either possible to exchange a model with all PackageMerges retained or a model where all PackageMerges have been transformed away (in which case package imports, generalizations, and redefinitions are used instead)."