To create form letters, envelopes, or mailing labels, you merge a data source file with a target document. Data merge is also referred to as mail merge.
The data source file contains the information that varies in each iteration of the target document, such as the names and addresses of the recipients of a form letter. A data source file is made up of fields and records. Fields are groups of specific information, such as company names or postal codes, whereas records are rows of complete sets of information, such as a company’s name, street address, city, state, and postal code. A data source file can be a comma-delimited file (.csv) or a tab-delimited (.txt) file in which each piece of data is separated by a comma or a tab, respectively.
The target document is an InDesign document that contains the data-field placeholders, plus all the boilerplate material, text, and other items that remain the same in each iteration of the merged document.
The merged document is the resulting InDesign document that contains the boilerplate information from the target document, repeated as many times as it takes to accommodate each record from the data source.