This is possibly the number one question I get asked when it comes to sleeping, merino and newborn babies. And while I would love to give you a definitive answer, unfortunately, like with most things relating to babies, there is no clear cut answer. Common sense and mothers intuition are often the best way forward.
I do however know the science behind merino and its ability to maintain a comfortable micro-climate for your baby and toddler;
Unless the nighttime temperature is 24 degrees plus, then your newborn baby will either need several layers of clothing and bedding or natural body temperature regulating fabrics like merino. Using merino against the skin will ensure that when your baby needs the warmth (becasue they can't regulate it themselves), then the properities of merino will retain and circulate the body heat. Likewise, when you put your baby to bed during the day or early at night when the heat is still in the sun the merino properities will draw and release moisture away from the baby. Premature babies may also need an extra layer of clothing until their weight is more full term.
So assuming the room temperature is around 18 degrees then ideally you would use a night-gown or all-in-one sleepsuit with a merino wrap. If the room temperature drops then I would suggest adding an extra bodysuit/singlet.
Like with babies merino is perfect for toddlers, especially ones who kick off their covers and blankets, then wake between 3-5am because they are cold. Our merino/cotton sleeping bags combined with merino pajamas or sleepsuits work together to prevent this.