Does it do multichannel pass-through, i.e. UHD121 Master out connecting to the 861 input port usually used by a UHD722, thus allowing the TV to do the source switching and allowing DD, etc. out via HDMI instead of optical?
You would use a SpeakerLink Input on the 861, not MMHR which is used by UHD722.
Also make sure to set the TV to output DD, not DD+ as the 861 can't decode DD+.
Can it be daisy-chained via a 218?
You can Wire TV > UHD121 > 218 > DSP Speakers.
What is the purpose of that spare HDMI input?
For a direct to Meridian source such as a DVD or Sky Box.
Removes any latency the TV may add, and removes any performance reduction from passing the audio through the TV.
It also gives you back the HDMI input to the TV which the UHD121 has used, in the case of TVs with few HDMI Inputs.
Rick