This is a post by Natasha Reaves on the Rand 3D Site.
The Merge/Inheritance feature is the way you incorporate one complete solid part into another solid part. The result is a single feature added to the target part. When setting the feature to the Merge option, no changes are allowed in the new part. The Inheritance option allows access to the individual features, enabling you to edit the Inheritance feature in your new part. You can use the Merge/Inheritance feature to handle cast and machined parts. The Merge/Inheritance feature will also allow you to make Cut Outs.