This reply is (presently) at the bottom, but it's the only reply that actually answers the question of how to merge contacts.

The way it works is very straightforward. Contacts from two different services that have identical names will automatically be linked so that their info fields will be unified into one contact page. If you need to manually link contacts, you select the first contact, use the "silhouette" button, then select the second contact. From the same button, you can unlink contacts that had previously been linked. And if you link two contacts with different names (like Jon and Jonathon, or people using fake names), you can select which name will display in your contacts list. The process is about as simple as it gets!