Merino is a breed of sheep. It has been popularized by new Zealand and Australia sleeping interests. Those countries are major exporters of wool and wool products due to huge quantities if sheep there. The merino breed has a smaller fiber diameter than your average sheep. Smaller fiber diameter corresponds to a softer-finer feel in the hand.

As wool is a natural fiber then the sheep has evolved to produce anti bacterial agents to keep its wool from being a haven for Bactria when it is on the sheep still. Commonly this is referred to as lanolin's. It can be purchased as a soft wax to put on other products.

The more refined-processed your wool us the less lanolin and other antimicrobial properties your wool will have. But usually more process ring of raw wool results in better fabric smell, flexabilty, and feel.