The Spanish Euro 2024 champion joined from Real Sociedad in a summer deal that could fetch up to £32.6m, but his Arsenal baptism was delayed when he broke his shoulder in a freak training ground accident.
Merino has since been in and out of Mikel Arteta's starting lineup, making nine appearances in all competitions, and there is a consensus that he will eventually oust Thomas Partey and join Declan Rice and Martin Odegaard as Arsenal's first-choice midfield trio.
The 28-year-old was only a late substitute in the 1-1 draw with Chelsea two weekends ago, but he put in a strong shift, and Watts feels that criticism of his early performances has been harsh due to his lack of a "proper start" in North London.
"Merino has been really tough to judge," Watts told Sports Mole. "He came in so late. He went all the way to the final Euros, went back to Sociedad, didn't train with them because the Arsenal talks were going on, finally gets the deal done.
" So he has no pre-season, gets over here, breaks his shoulder in his first training session, misses the first chunk of his season, comes back in, has to get started straight into the side with no Martin Odegaard alongside him, with Arsenal mixing and matching. He's not really had a proper start to his Arsenal career.
Watts highlights "really interesting" Merino performance against Chelsea
"I think he's been quite unfairly judged on some of his performances. But we saw some really interesting stuff from Merino when he came off the bench against Chelsea. I thought it was a really excellent cameo. And so I think for him going forward, this is the start of his season, basically now he looks fit. He's got Odegaard next to him. He might have Declan Rice behind him. And hopefully we're going to see why Arsenal were so determined to sign Mikel Merino from this point onwards."
Merino will be vying for a place in Arteta's starting XI for the visit of Nottingham Forest to the Emirates on Saturday, a game that Bukayo Saka, Rice and Riccardo Calafiori are also on track to be fit for.
However, Arteta's right-back ranks have been hit by injuries to Takehiro Tomiyasu and Ben White, who is facing months on the sidelines after a knee operation, which throws up the possibility of Partey deputising on that side of the defence.
Watts has implored Arteta to ditch the Partey right-back experiment, though, instead suggesting that Jurrien Timber moves over to his favoured side as Oleksandr Zinchenko, Jakub Kiwior, Myles Lewis-Skelly and Calafiori battle for left-back duties.
"It's going to be really, really interesting to see what he does, because this is basically the first time this season that he's got a big decision to make when it comes to midfield in terms of what you do with Declan Rice," Watts said on Arteta's possible team selection for Saturday. "Do you play Declan Rice as number six? Do you take Thomas Partey out the side?
"At the start of this season, the expectation definitely was once Merino signed that the Arsenal start in midfield would be Rice, Mourinho and Odegaard. Obviously, that's not, we've not been able to see that. Then Odegaard got injured before Merino came back. Thomas Partey, I think he's started every single game, unless I'm missing something apart from Carabao Cup games. He's started to find some really good form that we hadn't seen from him for a long, long time.
Watts: 'Arteta has no reason to play Partey at right-back'
"It's a big decision for Mikel. I'm intrigued. Obviously, Ben White not being there, you do have the option of playing Thomas Partey at right back, which I really, really hope he does not do. I don't see there's any reason why you need to do that, especially if Calafiori's back. You just play Timber on the right and Calafiori on the left.
"But even if Calafiori's not back, you've got Zinchenko, you've got Kiwior, you've got Lewis-Skelly. Play one of those at left back and play Timber at right back. Don't be moving Timber over to the left-hand side. And so it's really interesting what he's going to do in that midfield. I think it could shine a light on what his plans are for that area going forward.
"For the first time in a long time, I'm going to be really intrigued to see what he goes for in that stuff, providing everyone's fit, of course. If Declan Rice isn't fit, then that sort of takes that question out of his hands. But if he is fit, then yeah, I'm intrigued to see what he's going to do in midfield."
The Gunners have already put out seven different backlines in their 11 Premier League matches this season, but with the bulk of Arteta's starters now fit again, Watts is expecting to see Arteta's true vision of Arsenal for the current campaign.
"It's a squad game, isn't it? Injuries are part of football. So you've got to be judged on how you perform week by week in the Premier League," Watts concluded. "So far, Arsenal haven't been good enough. I think they've been unlucky. And up to, you know, four games ago, they were doing very well, and they coped very well with the injuries that they had.
"But ultimately, look at the league table now. It's nine points off top. It's not where Arsenal wanted to be at the start of the season. But it will be, from this point onwards, I think we're going to see the Arsenal that Mikel Arteta was really sort of envisaging for 2024-25. So it's going to be very interesting to see what what Arsenal do over this sort of next seven game period in the Premier League. It's crunch time for them, no doubt about it. And hopefully the players can step up and perform."
Arsenal are only leading Forest on goal difference in the Premier League table ahead of Saturday's match, and Watts also explained why the visit of the Tricky Trees is the Gunners' "biggest game of the season".