The Merge feature allows you to take two Tags in your account and merge them together. When two Tags are merged, the new Tag is applied to the people who previously had each Tag applied, and the two merged Tags are removed from anyone who had them applied.
To merge two Tags:
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Go to People > Tags
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Locate the Tag you want to merge and click on the three dots next to the Edit pencil
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Click Merge
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Tag 1 is the Tag you start the process from and Tag 2 is merged with Tag 1
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Enter the name for the new Tag
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Click Merge Tag
Once two Tags have been merged, there is no way to undo the merger. Merging tags will not impact your Automations, so you will need to manually update any Automations with the old tags.