It refers to touching a wall and turning into a painting. While Link is a painting, he can only move sideways. Link uses this ability to solve many puzzles and to defeat some of bosses in the game. It is essential during the final boss battle against Yuga.
Link gets this ability after his first battle with Yuga. Before he sets off to Hyrule Castle, Ravio gives him his bracelet as a payment of his rent, saying that it is an antique and that he doesn't know what it does. After encountering Yuga for the first time in the Eastern Palace, he is turned into a painting by his foe and left behind. However, the bracelet saves him by turning him back to normal. Subsequently, Link gets the ability to merge into a wall and pop back out at will. It is also worth noting that the final battle with Yuga is the only time an item can be used while merged.