Merisyl is a world in the Material Plane, but isolated from Golarion and the other more well-known realms inside it's own Crystal Sphere

Crystal Sphere

The Crystal Sphere construct is an Advanced Dungeons & Dragons 2.0 concept that doesn't seem to have an equivalent in the current Pathfinder rule set.

However, conceptually it fits very well into an explanation as to how the Merisyl game world fits into a holistic game universe.

Draconic Plane

Some scholars of Merisyl believe that Dragons who choose to depart their physical bodies to avoid their twilight years have their spirits reborn into the Draconic races of Merisyl.  While no evidence substantiates that claim, the strength of presence of the Dragon pantheon may account for the belief.  The pantheon of dragon gods is worshiped by more than the Dragons of Merisyl.  Indeed, virtually all of the human and demi-human races of Merisyl worship these Dragons as well.

According to those who concern themselves with philosophy, the strength of influence of the Dragon pantheon in the world of Merisyl is caused by the proximity of the Draconic Plane to the Material Plane near Merisyl.  While this sounds fanciful to those familiar with Planar travel, there is some academic evidence to support the existence of a Draconic Plane.  The theory with the most supporters holds that the great magical strength and force of will of Great Wyrms was able to control portions of the Astral plane and shape it into a haven for Dragons and their kin.  Over time this portion of the Astral split into its own demi-plane.