One important mechanic of the game is merging. Merging is accessed by going to the Armory screen located in the bottom-left part of the town screen. By clicking on an item and selecting the "Merge" button. you will be placed promptly on the merging screen.
Note, the items do not necessarily have to be the same item but of the same class and level. Merging three unlevelled items will give you a +1 item, merging three +1 items will give you a +2 item, and so on.
There are two types of merging: