Splitting: Studio can replace a part with smaller parts. For instance, it can replace a 1x1 brick with three stacked 1x1 plates.

Merging: Studio can also replace small parts with a bigger part. For instance, it can replace three stacked 1x1 plates with a 1x1 brick.

Splitting parts

1. Select parts,
2. Right-click on one of them to get the context menu and select Split
   
   Or Use the shortcut Alt+S
3. Studio will replace the parts it knows how to split with smaller parts. 

Studio knows how to split:

• Plates into 1x1 plates
• Bricks into 1x1 bricks, and the 1x1 Brick into three 1x1 plates
• Tiles into 1x1 tiles
• The different Slopes into the 1-wide slope of the same angle
• Curved Slopes into the 1-wide slope of the same length.

Merging parts

1. Select parts
   
   You need to select parts that can be merged into one part. Studio doesn’t know how to make multiple merges in one operation. For instance, if you select five 1x2 plates forming a 2x5 rectangle, and as LEGO hasn’t made a 2x5 plate (yet), Studio won’t be able to merge them into a 1x2 and a 2x4 or a 2x2 and a 2x3.
2. Right-click on one of them to get the context menu and select Merge or use the shortcut Alt + M
   
   
3. Studio will replace the selected parts with one part.

Studio knows how to merge parts of the same type that can form a bigger part of the same type:

For instance plates of different sizes can be replaced by one big plate: 

The merged part replaces the part that appears first in the step list. It takes its place in the step and it takes its color. The other parts are deleted.

Studio doesn’t know how to replace a stack of plates with a brick, except for three stacked 1x1 plates that can be merged into a 1x1 brick (and this, only brick by brick). If you want to replace plates with bricks, you’ll need to first split the plates into 1x1 plates then merge them by stacks of 3 into 1x1 bricks, then merge the 1x1 bricks.