The MERGE operation in Databricks allows for updates, inserts, and deletes to be performed as a single atomic transaction on a Delta table. It supports upserting data from a source table, view, or DataFrame into a target Delta table, with the ability to add multiple conditionals beyond just matching fields. This operation offers extensive options for custom logic implementation, provided the schema of new records matches that of the existing records. Other operations like UPDATE, INSERT INTO, and DELETE are limited to their respective functionalities and do not offer the combined transactional capability of MERGE.