It's interesting how asymetrical the game is. For the player, elves are kinda bad and lizard spies are kinda good, but since elf healers heal the player rather than the enemy regardless of team, and likewise for lizard spies, lizards are crazy good for the enemy and elves are absolute trash. Nevertheless, because the enemy doesn't know that all units other than spies and dwarves are trash, the game quickly becomes unloseable. Also there's a glitch where if you click next step too quickly to try and skip through a fight you get a huge amount of extra money, so I stopped after that around round 60 or so I think.
Not sure what's up with merging; it didn't seem to do anything. Though it's also not necessary, of course. Maybe it is just an easter egg for the gold star you get at level 3?