Sharing of merits means inviting other beings to rejoice in the virtuous deeds that one has done. By rejoicing, other beings also gain merits by having positive states of mind. Sharing and dedicating the merits help us practise generosity and cultivate the mental habits of sharing one’s good fortunes. Our merits do not decrease when we share it; in fact, they increase because the giver and the one who rejoices both benefit.
On the other hand, when we observe virtuous deeds done by other people, we also practice rejoicing by saying “Sadhu! Sadhu! Sadhu!”