The maximum number of layers in the current version of Draw is ten (in the next update the max will be twenty). And yep, you can merge layers; that capability is in the layers menu:
Tap the Layers icon in the top nav
Then tap the layer you'd like to merge. In that layer, tap the "..." icon on the right side of the layer
Then, tap the third icon from the left (a line between two arrows). That will open a menu with the choice to flip the layer horizontally, vertically, or merge it down to the one below.
Quick note: There is no UNDO for merging layers. (If you wanted to un-merge, you'd have to wait until it was in Illustrator.)
Does that help?
Yes that helps a lot. Argh, I feel so stupid for not finding the merge layers option.
Happy to help... That function's pretty well hidden.