The Merpeople are creatures that live in the Ocean. The Wizard refers to them in his dialogue at the Luau.
It’s theorized that the green creature that very rarely appears south of the docks is a merperson, but this has never been officially confirmed. The mermaids at the Night Market (added with version 1.3) and the mermaid on Ginger Island (added with version 1.5) look very different from this green creature (added before both of these), indicating the green creature may be another species
