Monster Breeder Reference
The game manual. New here? Start with the condensed version.
Splicing
As monsters age and grow stronger, their potential will eventually be met and it will be time to splice them. You may splice yourself with a monster or you may dual-splice two monsters. Splicing will reset your monster's level but retain most of the stats, meaning their child can gain stats for much cheaper SRP costs. It's also a valuable opportunity to inherit great moves from other monster types. Note: In order to stop very strong monsters from growing too strong, a system has been put into place. For all monsters over 250 combined stats, you will gain very slightly less. For those over 500 combined stats, you will lose a good amount. This is because a 5% increase of 100 is 5, and a 5% increase on 200 is 10. This only affects dual-splicing with a great or perfect rating.
There are rumors of getting a special monster through many generations of ideal splicing.
Splicing Chart
This slightly confusing chart should help you know which monster type you will get when splicing two monsters together.

Single-monster Splicing
Single-monster splicing is a bit different but generally the same. You sacrifice health and a crystal in place of the second monster to be spliced. How much you sacrifice -- max of 50% health -- along with the crystal strength, is how much of the monster's stats will be retained. It is possible to sacrifice 50% health and buy the best crystal and have a monster with slightly better stats than when you went in. Note a monster cannot inherit other types' moves in this manner.