With the Vertex Merge tool you can interactively adjust a distance threshold value by dragging in the 3D Viewport or by using a mini-slider. Modo merges any two or more vertices whose proximity to each other falls within that range.
Distance: Determines if vertices are merged together. Modo merges any vertices whose distance apart is less than or equal to this value.
Keep 1-Vertex Polygons: When enabled, leaves behind single- and two-vertex polygons when merging vertices. This is disabled by default for the tool to clean up error-causing polygons. However, there are some cases where a you may want to use the resulting 1- and 2-vertex polygons as a starting point for additional geometry.