https://www.blender.org/manual/modeling/meshes/editing/basics/deleting.html

The manual says:

AutoMerge Editing. When enabled, as soon as a vertex moves closer to another one than the Limit setting (Mesh Tools panel, see below), they are automatically merged.

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There are no "Limit" settings in the tools panel
for AutoMerge Edit

But AutoMerge Edit does work when I snap vertces/edges ontop of each other.