[itsme]

@Ramblers: 
Multiple databases are for pretty special usecases. As already said: for your use case keeping all songs in one database and using MobileSheets' database fields ('groups' in MobileSheets wording) to classify the songs is the way to go.
I use genres for musical styles (you mentioned old time, ragtime, celtic), collections for bands, sessions or line-ups, albums for fakebooks. Note that a song can be in as many groups as you like.
To merge your databases again (with all the edits and annotations you might already have done) you could use "share - export as .msf". Then import all .msf files into one common database. Make sure you have current backups in case something goes wrong.

@Ramblers, Skip:
I personally use 3 separate databases: 
1. The default database mobilesheets.db is my 'active' database with all the songs I play on stage, in sessions or rehearsals. I do all the edits here, synchronize it on my devices and make back-ups frequently
2. A test database that I empty completely every now and then via  "Other Settings - Clear Library". Here I can play around freely, investigate bugs, import CSV files for testing and so on without messing my active database
3. A really huge database with CSV imports of many fakebooks from my fakebook collection. That allows conveniently looking at these books. Necessary changes, if any, are done in the PDfs and CSVs and re-imported.

Other users use different databases for different bands or line-ups they play with. But this ONLY makes sense imho in case the different bands are completely independent and don't have any common songs.