Are you talking about how the strategy tester creates pseudo ticks from M1 data?
There is quite a comprehensive article about that here somewhere. Don't know the link though.
Mt4 doesn't merge M1 data, it gets the H1 from the server. If you have M1 chart open (only,) you are not updating H1 history.
Server basically uses:
I think the new mt4 will use 1m history data only and create all the rest of the historical timeframes from that.
I believe it will be in 1yr packages