I understand the OP's apprehension concerning to merge vs to overwrite.
The full package instructions state:
7. Upload the contents of the phpBB3 directory from your computer to your forum's directory. You may be prompted to overwrite the remaining files. If prompted to merge or overwrite directories, choose to merge them.
to overwrite at first impression seems as clear as can be: in the destination folder, files will be overwritten by files with the same name from the update package.
However:
to overwrite directories can be interpreted literally in the sense of replacing the "old" directory by the "new" directory, which amounts to a complete replacement: as in delete the "old" version of the directory and then upload the "new"version of the directory. If it is interpreted in this way, then all extra files which were in "old" directory are gone, as are all "regular" files which had edits.
to merge directories implies combining the "old" directory with the "new" directory. This means that files present in the "old" directory but not present in the "new" fileset will be retained.
But there's still the issue concerning files edited in the old version (e.g. custom coding, specifically style edits e.g. using the Group Template Variables extension). These will be overwritten and edits to the previous version will be lost.
Experienced users of phpBB will know how to handle this but I can imagine that (for the less experienced) this can be daunting.
AFAIAC the update/upgrade instructions are well written but it wouldn't do any harm to elaborate a bit on the "overwrite" and the "merge" aspect (not only in the English version)
ADDED: I took too long writing this, so I got logged out (luckily I copied before trying to post).
I now see thecoalman's post and I think he shares my doubts about the clarity of the "merge" section