If you are trying to merge data from separate layers, I think you are looking for the Merge (or Append) GPT tool, not the Edit, Modify, Merge.
Edit -> Modify -> Merge:
"The Merge tool combines two or more features on the same layer into an existing feature or unions two or more features into a new feature. Features that do not touch or overlap, merge as parts of a multipart feature. This tool is available in the Modify Features pane."
Data Management -> Merge Geoprocessing Tool:
"Combines multiple input datasets into a single, new output dataset. This tool can combine point, line, or polygon feature classes or tables."
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