Use magit-ediff to resolve merge conflicts
Use magit-ediff or 'e' on an unmerged item to resolve merge conflicts with ediff. Magit will set up an ediff with three buffers A, B and C. A and B are the original (conflicting) files, and C is the conflicted merge.
Use 'n'/'p' to move to the next/previous conflict, use 'a'/'b' to choose which changes (those in a A or B) should be the ones to keep in the merged file.
You can always just switch to buffer C and edit what the merged version should look like.
Once you're done resolving all conflicts, just hit 'q' to exit the ediff merging session, ediff will prompt you to save the changes to the merged file. Save them and then move on to the next unmerged file.
Once you're done, just stage the resolved versions of the files and continue with your merge or rebase.