Basically what you do is get out any of the Merfolk "Lords" to beat down quick with your 4/4 or 5/5 Merfolk. For more fun, find Aquitect's Will to make them unblockable (Merrow Harbinger finds it no problem).
For token + life gain, play Summon the School with atleast 1 Judge of Currents and some other Merfolk. Make your dudes, at the end of your opponents turn tap down your 4 merfolk and put School back to your hand, gain 4 life, and keep going. It gets crazy with the more guys you have out like Merrow Reejerey and Merrow Commerce, even Stonybrook Schoolmaster. But with Merrow Reejerey you can play School, then untap a land, make your tokens, tap your dudes, bring back School, and tap some more lands to replay it (the more Reejerey you have out to untap lands, the more can keep playing it).
As for counters and stuff like that, you really dont need it unless you know someone is playing Wrath of God or other type of board sweepers. And if your worried about stuff like Moat, you can always run some type of bounce like Boomerang.
However, this deck was built around the time Morningtide came out so it doesnt have newer Merfolk. But Lullmage Mentor might be an answer for any of the stuff mentioned above (Bounce/Board sweep).
I do like the Intruder Alarm combo, but it's pretty much a dead card unless I get the Stonybrook Schoolmaster. Plus, as a neat little bonus, the millfolk deck happens to be legal in Block format (all Lorwyn block). So, although it might be fun, I dont think I'll add in Intruder Alarm.
Intruder alarm is not always a dead card. Its surprising use is that it can potentially delay an aggro deck because it can leave its creatures tapped.
Of course it combines well with Merrow Commerce and Opposition, and comboes with the schoolmaster. I actually built a millfolk deck so I can finally have use for my Alarms, which has been collecting dust since Exodus