TortoiseGitMerge not only shows you the differences between files but also lets you resolve conflicts or apply changes.
If you're in two pane view, then you can only edit the file in the right pane (Mine). To apply changes made in the left file (Theirs), right click on the changed lines and select → . Then the changes from the left file are added to the right file.
Sometimes you actually want both text blocks, and the context menu also offers you → and → .
You can also edit the output file just as you would in a text editor. Such lines are marked using a pencil icon. Please note that if you want to make any of the line/block-based changes described above, it is better to do those first since once you start editing the file yourself it becomes impossible for TortoiseGitMerge to keep track of the relationship to the original files.
If you're in three pane view (sometimes called merge view) you can only edit the file in the bottom view (Merged). As in two pane view, you can right click on conflicted lines and either select → or → . In addition, if you want both blocks, you can select → or → . According to the command you've selected, the changes are used in the resulting Merged file.
Sometimes a file will be marked as conflicted in Git, yet when you view it using TortoiseGitMerge there are no conflicts shown. This may be due to the whitespace handling you have chosen. If you choose to ignore line-endings or whitespace changes, those lines will be marked using the Conflict-Ignored icon. To resolve the conflict you still need to pick which version you want to use.
Note that if you use TortoiseGitMerge on the same files again, any changes to your working copy, whether in TortoiseGitMerge, or by hand-editing, will be discarded and the file will appear as it did when conflict-editing first started.