I haven't seen this happen yet.
Since March 2011, a warning is shown after you save, if a conflict occurs.
The user who clicks "Save Your Edits" second will overwrite the first person's changes.
There is no type of merging interface.
The universe will end, and a new one will be created, starting from the exact same moment that the last universe left off, with all of the exact same properties as the first universe, except with one fewer waffle.
In other words, every time two edits collide, random quantum fluctuations kill a waffle. Please, think of the waffles.
Note that his happens all the time. When I think my edits are going to take a long time, I leave a comment saying that I'll be editing it for a while. That way people know not to edit the question lest the universe be recreated.
Interestingly, there is limited support for merging: if one editor edits only the title, and another edits only the body, then both changes will be preserved. Same goes for tags.
Since the end of May 2011, the more substantial edit will win. There should also be an "n other users are editing this post" notification shown to all editors whenever a post is being edited by multiple users.
Both users changes will show in the revision history, with the user that saves last overwriting the user that saves first. There is no provision for locking or checking out to edit. As you said, you've never noticed this, so it works pretty well.