Merge report fields are not true fields, because they do not store any data.  Merge report fields are used to drop a bit of custom layout within an auto-generated "generic layout" of a form.  Merge report fields can also be used for grouping.  With grouping enabled, the merge report isn't just inserted within the generic layout, it replaces a section of the layout.  In extreme cases a grouped merge report field is used to replace the entire generic layout making the "generic layout" into a full custom layout.  In advanced configurations grouping merge report fields can be nested and enabled/disabled using permissions or categories to give unique interfaces in different situations.  As always, only settings specific to merge report fields are documented here.  All of the more generic settings are documented in the main fields article.

Format/Setting	Description
Merge Report	This is the merge report that will be included in the layout.  Merge reports with a primary form that matches the current form are listed first.  Next, in an "Other" grouping, merge reports are listed which may apply, but don't have a matching primary form.
Format	The merge report may be shown with a label and hint to the left and the merge report on the right like a normal field.  Alternately, the merge report may be configured to take the full width of the main page area.  In this case the label and hint go above the merge-report.  The label and hint are always optional.

As mentioned in the introductory paragraph, merge reports support grouping.  When other fields are grouped within a grouping merge-report, the merge-report replaces the grouped fields.  This is normally just a formality to make it clear that the merge report is giving an alternate layout for the grouped fields.  The grouped fields could just as easily be hidden without using grouping and give the same effect.  However, there are times when grouping can be used to create dynamic functionality.  Namely, if the merge report used by the merge-report field cannot be displayed, then the grouped fields become un-hidden:  It is like the merge-report field does not exist.  So what can cause this disappearing/reappearing merge-report behavior?

A merge report may not be available for two reasons: either because the current user does not have permission to the merge report or because the merge report's category requirements to not match the current record.  This allows alternate layouts to be displayed to different groups of users in the first case, or alternate layouts for different types of records in the second case.  This dynamic show/hide functionality can even be used with nested, grouping merge-report fields.  If the outer-most merge-report is available, it is shown.  If it is not available, the system checks the inner merge-report field and displays it if possible.  If neither merge-report is available, then the original fields are shown...or perhaps yet another merge-report.