Since we never actually get to meet the Faerie Queene, Mercilla is the main character that depicts royalty and the workings of a court. Yet another manifestation of Queen Elizabeth I, Mercilla, whose name means "mercy," suggests the connection between being powerful and being merciful—not an easy connection to navigate, especially for a woman in the 16th Century.
Indeed, while women were often associated with the virtue of mercy, a monarch like the Queen of England also needed to make sure she was associated with total, awesome, terrifying power so that other monarchs thought twice about invading. So Mercilla as a character captures the tricky balancing act between communicating "Don't mess with me!" and still embodying the virtue of forgiveness.
It's important that Mercilla appears in Book 5, the book of justice, since she's also an embodiment of the balancing act between justice and mercy. And if you've heard anything about our dubious friend Talus, you'll remember that mercy and justice don't necessarily seem to work together very well in this poem; Talus repeatedly behaves mercilessly in the name of justice.
While neither the figure of Mercilla nor Artegall, the figure of justice, really seem to resolve this mercy vs. justice conundrum, we can see the interaction of the two characters as an attempt to depict the mercy vs. justice deathmatch through narrative. The fact that Artegall is so drawn to Mercilla and pledges to assist her and her subjects suggests that even if joining mercy and justice is challenging, it remains an ideal.