Dynamics 365 - letter campaign using mail merge

hello

I am very confused about all the articles about mail merge,

i am able to  create a campaign, marketing list, campaign activity which is a letter via mail merge

but then

when I print the letters at the end of the mail merge and I select 'create letter activity' does the letter save against the contact in crm or does it create another letter activity or does it use the campaign activities that are already distributed? I cant get this to work

I need to be able to show under the 'contact' record that they received this letter and the template is attached so a user can see what they received

please can anyone help achieve this in simple terms?

thanks in advance