Mrs. Merkel is a fairly active Lutheran from what I understand. She grew up in officially atheist Eastern Germany as the daughter of a Lutheran pastor. She made a point of being confirmed instead of a communist coming of age party that was the norm for kids in East Germany. Doing this apparently would catch her some flak later in life.
She’s also the leader of the CDU/CSU parties. The CDU is the moderate conservative (christian) party whereas the CSU is the conservative catholic party from Bavaria. Though they are officially separate parties they essentially operate as one. So this is a long way of saying that she might be there in part to represent the CSU and of course there are certainly other things they are probably discussing.
As for christianity being alive in Germany, sort of. Attendance is nothing near what we have even in the US, but it is alive. I like to listen to German radio from time to time. On one of the channels a guy billed as “your radio pastor” gets on fairly regularly. While my German is not good enough to fully understand what he is saying, he’s clearly reading a Biblical passage and gently evangelizing. I don’t know this guy’s background, but I’d be pretty sure he’s not some over the top televangelist type; Germans do not go for these folks at all.