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I use my own extension Speedster Advanced for this. But the basic principle is that the name of the merged css and js files includes the timestamp of the last modified file - see Mage_Core_Model_Design_Package::getMergedCssUrl(). Any time you edit any of the css files a new file name is created causing browsers to request the new file instead of reusing the cached version. Since your head block might be cached a Magento cache refresh is needed.