Did you try it? I would recommend a simple task, one table, PK (identity column) an insert timestamp and a text column. Use both Apply and Store Changes for your test to get full understanding. You may want to enable TARGET_APPLY to TRACE or even VERBOSE to see exactly what happens. And you may was to set SOURCE_CAPTURE to TRACE (or even VERBOSE) but only just around the test, as typically a lot of log is generated with this option.
Did you check the documentation? "8.15 Using Microsoft SQL Server as a source" - Merge is not listed under the Limitation so it should work. If it is not working as expected, then submit a proper Support Case showing your work (above).
hth,
Hein.
