Merits are positive points one user can give to another. You can give one per 24h to any user. Usually, people give merits to other users when they think a story is good or an article is well written.
It's kind of a grade/reputation system in other forum systems.
Write a good story and you may get some merits your way.
You can also get demerits(which will decrease your reputation). Usually, demerits are given when you troll around the board or disobey rules.