Released 22 dec 2014..
Melding is unlocked at blacksmith level 5.
Placing five items of a lower rarity guarantees a higher rarity. Placing 4:1 items epic:flawless gives a huge chance for legendary success. Even yet, 3:2 epic:flawless give a reasonable 94% chance to be legendary. 3:2 ratio is the best approach to upgrading quickly. Melding and brawls are the only way to obtain legendary artifacts outside of ultra-rare wheel spins.
Melding five helmets yields a helmet. Melding five rogue armor pieces yields a rogue armor piece of random type. Melding anything with a weapon usually gives a weapon. Melding weapons at all is useless as the output weapon is of lower quality than the best, high-damage base weapons. Typically, saving up five types of a specific gear piece for a specific class is best to GUARANTEE getting what is wanted. If I want a rogue helmet, I need to put in five rogue helmets of lower quality to ensure the melded item is a rogue helmet. This is critical for artifacts, since these are expensive and hard to come by for melding.
Note Unreal can't be melded. 5 legendary will give 1 legendary in return. It may say chance of Unreal at 3 epics and 2 legs or unreal in panel but this is just a visual error.
Also only one crafted piece of gear can be used.