Merfolk is a type of Myth, though more commonly known by their more gendered names Mermaid and Merman. The difference between Merfolk and Merhybrids is that Merfolk only can operate underneath the water surface, while Merhybrids has the ability to take a 'Human' form and function properly on land. This is done either through a process of shape shifting or through amphibian properties within the myth.
Typically merfolk and merhybrids are found in and around water. They also have their own undersea district of Heliopolis called Atlantis, which is under much speculation by humans wether or not it exists.