Let's say we have a file named orig.txt with the following contents.
Apples are red.
Oranges are orange.
Blueberries are delicious.
...and a file named mod1.txt, which is a modified version of orig.txt:
Apples are obviously red.
Oranges are blue.
Blueberries are delicious.
...and a file named mod2.txt, which is also a modified version of orig.txt:
Apples are obviously red.
Oranges are NOT blue.
Blueberries are delicious.
...and we run merge as follows:
merge mod1.txt orig.txt mod2.txt
It will analyze all three files, write to mod1.txt, and display the following warning:
merge: warning: conflicts during merge
This means that the merge was successful, but we should be aware that there was a conflict. If we open mod1.txt — which by default is the file where the merge is written — we will find that it now contains the following text:
<<<<<<< mod1.txt
Apples are obviously red.
Oranges are blue.
=======
Apples are obviously red.
Oranges are NOT blue.
>>>>>>> mod2.txt
Blueberries are delicious.
It is up to us to decide which "Oranges are..." line to keep (or to combine them in our own way), and make the edit to the file manually.