It includes kindness and forgiveness, of course. But at some levels, mercy is far more pragmatic and hard-nosed. It has to do with the creation of justice and equity. In a world of power, it is incumbent on those with power to help create equity. Mercy is not charity.
Charity is the visible fringe of mercy.
A steadfastly loving father will not rest until all his children are properly on their own, established, working well. The children of that father must go and learn his virtue. The virtue is recognizable in the most tough-minded person. Do not be deceived. Sacrifice has to do with depleting the wealth of the world.