Merlin has right now 2 concepts of flags for coloring elements in the Gantt chart of Merlin projects. This is done by the flags.
The auto flag or the one you explicitly set; Red, Yellow, Green

The explanation on the color coding of auto flags is given in the visual dictionary in Merlin help

	Green for: Activity is complete
	Blue: Activity to start in the future
	Red partially filled: Activity is started but is behind schedule
	Yellow partially filled: Activity is in progress either ahead of schedule or on time
	Red: Activity is late and hasn’t started yet

What does it mean ‘on time’?

Merlin compares the ‘Actual Complete Through’ date to the ‘Status Date’ (File > Project Settings > General > Date Presets > Status Date). If there is no particular date specified in the project settings, status dates equals the current date.

If the ‘Actual Complete Through’ is higher or equals the status date, the activity will be coded yellow, otherwise red.