Originally called Dinas Ffareon, it is an Iron Age hill fort overlooking Lyn Dinas.
It was here that King Lludd ab Beli buried the two dragons which fought each May in Oxford, as told in the Welsh epic the Mabinogion.
Later, when King Vortigern retreated back into Snowdonia he chose Dinas Ffareon as the place to build his fort, however each night the ground was shaken such that the fort fell down.
The King's advisors stated that a fatherless child had to be sacrificed in order to stop the fort tumbling, and after a search it was one Merddyn Emrys (Merlin) who was found (being taunted by some boys as to his lack of a father).
Merlin, however, had a wealth of local knowledge and upon his advice the dragons were disenterred whereupon they began fighting.
Eventually it was the Red Dragon which succeeded over the White Dragon which fled. The fort was renamed in honour of Merlin.
Merlin prophecised that the Red Dragon represented the Britons and the White Dragon the Saxons and that the event meant that the Britons would be victorious over the Saxons.
The Celts tended to refer to leaders as dragons (draig) so one could also read it as meaning the leader of the Britons being victorious over the leader of the Saxons, something which came to pass through Uther Pendragon and then Arthur himself.
Excavations have shown that there was once indeed a pool of some form on this hill fort, in use during the Roman occupation.