TabScout.

A merman is a male version of a mermaid. In this song, Hendrix sings about how he wants to escape the war-torn world and all the horrible things going on (The Vietnam War for instance) and be reborn as a merman using a machine, which is probably drugs. He decides to leave "the out of style" to their destructive ways and live underwater.
This song isn't simply anti-war, Hendrix shows his disgust with the whole world we have built ourselves and how all human progress has been halted by things like the war. He decides to evolve and escape from the others. (thanks, Lucas - Campbell, CA)