I think Gerd said that now those underlying roads/lines are merged for level 1 and higher. He said to merge them until someone complains. Merging as in reversing their direction so longer segments can be merged. All roads that can be merged without changing direction are merged anyhow.
Allow-reverse-merge does not reverse lines that have an direction tag set, or are listed in the option to exclude them (which sets direction for them).
Without allow reverse merge no roads are reversed at all. With it any road that has no direction tag or oneway tag set will be reversed if it can improve the merge length.