See, I am not scared of using the word merge in a mmo =P
This is a fantatsic move as the engine has always felt like it should be doing this and I have no idea why they didn't do it from launch.
A mega server means every one doing PVP is basicly in the same area. Kind of how Guildwars 1 worked but more like Star Trek Online. You will seamlessly be put into zones where you friends / guild and other people who are related to you in some way ( language ).
Its basicly overflow 24/7 just with no notifcation and how all the holiday events worked.
I can see this upsetting some people who world boss ping pong between realms and it might be hard to sync world boss timers but who cares.
Also they are nerfing the Champ train in Queensdale ( level 1 - 10 zone ) to get people out of doing the easiest path and exploring the world.
Elderscrolls online also has a Mega server system and Star Trek Online / Neverwinter.
I am also hoping they will give us a chance to change our world server for free. So that I can try and group us all together for WvWvW.
Full details on the feature pack for Guildwars 2 can be found here:
NB. Google spellchecker wasn't running when this was posted, expect spelling mistakes.