Perhaps a fanfiction could focus on the moment when Merlin is about to use his magic in 'The Moment of Truth' but is conflicted because he's afraid of losing Arthur's friendship. He could have an internal struggle where he weighs his loyalty to Arthur against the need to save Camelot with his magic. It could also explore how the other characters like Guinevere or Lancelot might react if they knew Merlin was on the verge of such a big revelation.
It could be an unknown sorcerer who has infiltrated Camelot. This sorcerer could sense Merlin's power during 'The Moment of Truth' and see him as a rival. So, he tries to frame Merlin for dark magic, causing chaos in Camelot and forcing Merlin to prove his true intentions while also dealing with this new threat.
Perhaps a story where Tiny Merlin accidentally shrinks the whole Camelot and has to figure out how to reverse the spell. He would have to use his wits and small - size advantages to solve the problem. This could involve sneaking into small spaces in the shrunken Camelot to find the source of the spell. It would be a really fun and adventurous story.
One more idea is that Merlin is tied to the bed in a dream - like state created by an ancient magic. In this dream world, he is faced with his deepest fears and insecurities. His friends in the real world notice his strange behavior and try to wake him up. Merlin, while in the dream, has to find the source of the magic that is binding him and break free. Through his inner strength and the memories of his friends, he manages to do so and wakes up, having learned more about himself and his magic.
One idea could be exploring the backstory of the 'phantom' in more detail. Maybe he had a normal life before turning into the phantom and there were certain events that led to his transformation.
One idea could be that Merlin uses his magic to help the Avengers in a battle against a powerful magical enemy. Maybe he disguises himself as a normal human at first and then reveals his true powers when the situation is dire.
One plot idea could be Merlin and Nimue teaming up to save a magical forest that is being threatened by dark forces. They could use their combined magic to fend off the evil entities. Another idea is a time - travel plot where they are sent to the future and have to adapt to the new world while also finding a way back. And perhaps a plot where they are wrongly accused of a crime in Camelot and have to prove their innocence together.
One plot idea could be Merlin, as a borrower, is discovered by Arthur. At first, Arthur is shocked but then becomes intrigued. He decides to protect Merlin from the other humans in the castle. Another idea is that Merlin, in his tiny form, uses his magic in new and creative ways to help the borrowers' community. For example, he could create miniature tools or defenses against predators. A third idea might be that Merlin has to go on a quest to find a magical item that can restore his normal size, all while facing the challenges of being so small in a big world.
One idea could be that Merlin, as a wizard, is hunted by vampires because his magic is seen as a threat to their existence. But then he discovers that some vampires are not as evil as he thought and they form an uneasy alliance to fight a common enemy, like a dark sorcerer.
One idea could be that Merlin uses his magic to help Sherlock solve a case that seems to have supernatural elements. For example, a series of murders where the victims all seem to have died from some unexplainable force. Merlin's ability to sense magic and his knowledge of the old ways could give Sherlock new perspectives on the case.
One idea could be Merlin having to deal with the political intrigue of being a king. He might face challenges from nobles who don't trust his magic. Another could be Merlin using his magic in unique ways to improve the kingdom, like creating new irrigation systems for farmers. Or perhaps he has to form alliances with other kingdoms while hiding his true identity as a powerful sorcerer.