Merging is used to change primary Keyword Values in AutoFill Keyword Sets; updating is used to change secondary Keyword Values for existing primary Keyword Values that are valid.
For example, you might use an update message if a patient begins seeing a new physician. You might use a merge message if two external IDs (MPIs) were assigned to the same patient, and you now need to update the associated documents and AutoFill Keyword Sets with the correct information.