I’ve been exploring this feature and have used it to finally create my office as a new private place and then assigned all the previous instances of “close enough building name” to it.
I could have done that manually before but it was so much effort (hundreds of instances) that I didn’t bother. Fixing it in 20 seconds was absolutely marvellous, so this is just my quick note of acknowledgment and appreciation.
Thanks! I really should have built that feature years ago 
Unfortunately by the time I did build it, it was too late for me personally. I’d already done all the tedious manual work of cleaning up the places I would’ve used the feature for 
But yeah, great that it’s finally there! Will definitely come in handy from now on.
Sorry if I am missing something obvious but is this documented somewhere? I can’t seem to find the option to merge places.
In your daily timeline you’ll see your places you visited and how you travelled between them.
Tap on a place you visited, scroll down and you will see “place details”.
Tap “place details” and then tap the three dots to see “merge places”
You then see all the possible places you can merge with the place you’re visiting.