Merging Two Pictures Side by Side in Photos App

Not in Photos, but you could use the Pages.app on your iPhone to create a page with two photos or a Keynote presentation with two photos on the same slide.

Yes.

Select both photos and create an slide show. Now viewing the slideshow with phone in portrait mode (rotate phone 90 degrees left) will put the photos side by side. You can screenshot it and you’ve got yourself two photos merged into one with an external photo editor app.