The case went to the Supreme Court. It wasn't tried in any lower courts because cases between states have original jurisdiction in the Supreme Court.

The Supreme Court can reject a case for lack of standing (the plaintiff does not have the right to sue the defendant) or for lack of merit (the lawsuit is obviously frivolous). They can also reject it if they think the lower court ruled correctly, but that doesn't apply here.

In English, yes. However, "on the merits" is a term of art that explicitly excludes procedural matters like "can you even bring this case" or "did you file on time." Standing is a procedural issue.

So while the suit was thrown out for being obviously faulty, it did not fail "on its merits." Mind you, that does not make the objection sensible. If I write "they are bad because they are a poopy face" in crayon, and then I don't pay my filing fees and the case is thrown out for that reason, I am technically correct that my case was not heard on its merits, but that doesn't make it a good point.

Standing and merits are both terms of art. Merits essentially means whether one side wins or not. Standing OTOH is a preliminary matter like jurisdiction. If the court lacks jurisdiction over the defendant or the subject matter of the dispute, they kick the case on jurisdiction without reaching the merits. If the plaintiff doesn't have standing, they kick the case on standing without reaching the merits.

Your confusion is 100% reasonable because there is _conceptual_ overlap between standing and "who wins." For example, one aspect of standing is "injury-in-fact." That means "you suffered a harm recognized by the legal system." If the court says no standing because no injury-in-fact, to a layperson that's similar to saying "stop crying, go home." Which sounds a lot like saying "you lose the case."

Right. If I recall correctly, their position is that the Supreme Court can't refuse disputes between states.