How do I sell to merchants?

You cant yet. There will be an update (eventually) when you place the item you wish to sell on a block/crafting table like item and it gives you pixels.

As of 1.0 stable, most merchants have a 'sell' tab. You can drag your items or use shift click to add items to the sell list and see how much the items will sell for. Remember to click the sell button, otherwise the items will be returned to your inventory after the merchant's window is closed