From Bitcoin Wiki
Merged mining is the act of using work done on another block chain (the Parent) on one or more Auxiliary block chains and to accept it as valid on its own chain, using Auxiliary Proof-of-Work (AuxPoW), which is the relationship between two block chains for one to trust the other's work as their own. The Parent block chain does not need to be aware of the AuxPoW logic as blocks submitted to it are still valid blocks.
Merged mining is the process of allowing two different crypto currencies based on the same algorithm to be mined simultaneously. This allows low hash powered crypto currencies to increase the hashing power behind their network by bootstrapping onto more popular crypto currencies.