It is an exclamation of surprise,with reference to the famous wizard Merlin.Usually this phrase comes up in fantasies and fairy tales,where it serves a similar function as "Oh my god".
请教博学高手：Merlin's beard是什么意思?
It is an exclamation of surprise,with reference to the famous wizard Merlin.Usually this phrase comes up in fantasies and fairy tales,where it serves a similar function as "Oh my god".