Go to the upgrade screen of an item to combine, or rather infuse, weapons. It'll be on the lower left side. You can only infuse gear that is of higher stat, same armor/weapon slot, and same color as whatever you're infusing it with. However, blue items are compatible with purple and yellow. What I do, is always keep an extra blue item on my character to help my chance to get higher decrypts from the cryptarch. Whatever is the highest or second highest becomes the new spare and one of the two I infuse with a legendary I want to keep. You can do the same with your purple and yellows as well.
And yeah, year 1 gear doesn't carry over to year 2. Once you get to racking up more gear, the stuff the doesn't carry over will start to look useless, but don't dismantle that shit just yet. There's a quest for class specific weapons where you have to dismantle a certain amount of weapons as part of the quests. Your year 1 weapons will/can count towards that.
But before you can do any infusing you're going to need legendary marks. They can be earned by playing the daily mission/crucible games on the lower left of the map while in orbit. You also get 3 Legendary marks for any purple items you dismantle. Post story quest give legendary marks as well and lots of other shit. So I'd recommend taking up bounties and knocking them out as you play the story. The bounties have changed a bit and most you can complete without even actively seeking them out.
