It is possible to merge linked and visible layers into a single layer. Merging is often done to optimize file size and to organize an image layer in a better way.

To merge the two layers in this document first, click on the empty box to the right of the eye icon in the layer palette, in the layer 2.

This would link layer 1 and layer 2.

Select Layer.

Select Merge Linked. This would merge the two layers.

To delete layer2. Click on layer2.

Drag it to the Trash icon in the bottom right corner of the layers palette (or)

Right click on the layer 2

Select Delete Layer

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