I am a bit perplexed at this, does one bash the merged.esp or not?

I realise they both touch Levelled lists, but the merged one has found things the bashed didn't (vice versa as well), so i need help.

Depends on what your intention is with the merged.esp. I personally keep mine after the bashed patch, and delete all the entries that are not merging correctly, keep the ones that bashed patch doesn't pick up on, and carry over some changes from bashed patch.

But I've seen that many keep the merged before the bashed patch, so I might be missing something here. I've never had any reason to bash it NV, OB or skyrim.