Can someone explain to me what means figure of merit in terms of an oscillator?
There is no explanation online related to this.
A Figure of Merit (FOM), for anything, is a benefit/cost ratio that's found useful to express the 'value' of a particular component. You choose a wanted thing, a benefit, that comes with an unwanted thing, a cost. For a FOM to be useful, those costs and benefits should be easy to scale, so that you can compare the FOMs for different versions of the component.
For instance, a FOM for buying bags of sugar might be the kg/$. Do you buy several small bags, or one large bag? For Peltier material, a useful FOM is electrical/thermal conductivity ratio.
The most common FOM I've worked with for oscillators is the phase noise to carrier frequency ratio, is this the one you are talking about? With a signal source, it's fairly easy to multiply or divide the frequency with a diode multipler, PLL, or frequency divider, with a corresponding increase or decrease in phase noise. Do you buy a low frequency VCO and multiply it, or do you buy the high frequency VCO? Note that phase noise tends to scale differently depending on whether it's very close in, at modest offsets, or far out noise floor, so there is no one-size fits all best.
At some carrier frequencies, certain technologies allow good FOMs that are not available at other frequencies, so it makes sense to track the noise/frequency ratio, for your particular phase noise specification.