More details information can be found on playonline's patch info... but a summary.. At level 75, you can get a key item called "Limit Breaker" from the moogle next to Maat. After that, you have the options to gain limit points instead of experience points for you level 75 jobs. You can toggle this option as soon as 1/44,000, but nobody would since you would want a nice buffer for deaths (where you lose normal experience points). For each 10,000 limit points you get, they are converted into 1 merit points.

You can use these merit points to increase virtually any stats on your character. For a certain category, you can boost it up to 5 times. Each additional time you boost the same stats, it costs more merit points for a single boost. To tell you the truth, it's a very miniscle improvement for an extremely large amount of xp. That's why you don't see level 75 xp'ing all day to get merit points.

It's 44000 exp for LV 75, but yea, you can switch between exp and merit, but if you have merit, you wont get EXP, but you can set it to EXP, and when you get to 43999/44000 you will get merit points instead of EXP no matter what you have it set to

After a person reaches lvl 75 they can trade exp points gained for Merit Points. These Merit Points are used to raise certain stats above what would normally be possible. I'm not sure about all of the details but I think that things like HP, MP, STR, DEX, etc can be raised. However, I think you can only have a limited amount.