Does "Masters" folder in Photos package contain everything? Theres a folder called /Masters in the Mac Photos App, when you "Show Package Contents". I was wondering if this contained all Photos and Video including Hidden content.

One recommended way I've seen to Merge two Photos Libraries is to take master from one and drag it into the Photos app. I just want to make sure this is correct before I delete the "merged" Photos Library.
Yes it does, however Photos will have to regenerate all the thumbnails etc.

If you are trying to merge to photos libraries why not open the library you want to merge select all Command+A and then file Export

Then drag them into the new library, this way there is no risk of corrupting anything.