Likely I am missing something. What am I missing?
To explicitly answer your question: I don't think you're really missing anything. I suspect you just haven't fully internalized the idea that other people are using "merit"/"desert"/"deserve" in a different sense to you. (You believe it, but don't alieve it, in the local jargon.)
Edit: for what it's worth, I think your understanding of "merit"/"desert" is the more robust one, precisely because it holds up better in the face of determinism. The lay meaning ("cosmic justice") looks pretty shaky if one starts asking oneself questions like "Why is a paedophile whose paedophilia is caused by a brain tumour intrinsically more deserving of leniency than someone who's just always been a paedophile?".
This thread is for asking any questions that might seem obvious, tangential, silly or what-have-you. Don't be shy, everyone has holes in their knowledge, though the fewer and the smaller we can make them, the better.
Please be respectful of other people's admitting ignorance and don't mock them for it, as they're doing a noble thing.
To any future monthly posters of SQ threads, please remember to add the "stupid_questions" tag.