I'd like to think of the merit system as the like button on most social media platforms or the upvote button in sites such as Reddit. Merits in bitcointalk is a way to make a post stand out so that readers skimming through a topic could find the "best" replies and read them. There were even talks about add a "sort" feature where you could sort posts based on number of merits they've received (it wasn't implemented though).
The only difference is that you have to "earn the power to upvote" on bitcointalk. It doesn't come free. To do that you have to receive merits yourself.

There really isn't any fixed criteria, everyone does their own thing. It may be a post that made you chuckle or a well written guide that is useful for everyone like this.