HTML5 is not superior. HTML5 has some features that were exclusive to Flash like sound in browser/windows for games/apps and such. Flash receives updates and is still a different thing.
That's the unique selling point for Flash: it allows real-time, complex and graphical interaction with the user (and without page reloads). Unfortunately, it's a rather hacky add-on, which bypasses large parts of the browser security model (thus burdening itself with the obligation to have its own security model... and having its own bugs). It also means that you're using two completely distinct languages (well... four actually: HTML, JS, Flash and something server-side, PHP for instance) and that pages consist of two parts (the HTML part and the Flash part) which are severely limited in the ways they can communicate with one another.
So, after years of Flash being a terrible solution, but (on account of being the only serious one) still being the best solution, some people finally got together and decided to "let's make this ugly kludge obsolete; let's use the 'don't-do-this' lessons from Flash, redesign things from scratch and solve the same problem (add the same capabilities) but get it right this time".
That's essentially what HTML5 is, a way to extend HTML in such a way that it becomes possible to create those same real-time, complex, graphical interactions with users, without the ugly abomination which is Flash. Sure, it had its uses, it paved the way and showed what was possible, but now that we have a far superior (from a coding and technical point of view, much nicer and "cleaner") way of doing things, it's time to tell Flash "thanks for all that you have done, now please go to the museum and take all the troubles you inadvertently caused with you".
Flash may be merged with HTML one day.
Ehm... if you mean that HTML might borrow a few ideas from Flash and implement similar concepts itself, sure. If you mean that there someday will be a language with major contributions (in syntax, programming model, libraries, etc.) from both Flash and HTML... I'm not sure how that could work (and I'm pretty sure it will never happen, even if it would technically be possible, of which I'm not convinced).