What does merit (puṇya/puñña) actually mean?

There is a lot of talk in Buddhism about merit. I think the word merit sounds a bit like a good grade in school or some star the teacher puts in the book. - Is merit something that follows my thoughts and actions as a consequence? - Or is merit more like an acquired disposition to act and think in certain ways? - Or perhaps it's both an acquired disposition and a consequence? - Are we born with a certain "amount" of merit due to karma? - How does a person know that s/he is accumulating merit?