It is dumb for me to think that that is how planets form ?

Nope. Because this is exactly how planets form.

Those are balls

This contact binary would eventually meld right? Given enough time or am I dumb.

That's the way I understand it too

Eventually all orbiting bodies will meet because they lose energy to gravity waves they send off into space.

Unless the larger body is spinning faster than the smaller body, in which case tidal forces will give it energy (unless the larger body is perfectly uniform and solid enough that it lacks fluid tides) which causes its orbit to rise and can lead to orbital escape, especially if there's other bodies to pull on it in the vicinity.

Our moon is an example of that exception. We were once joined, some 4.5 billion years ago or so, but never will be again, other than rocks carried by visitors and the low chance we end up impacting the sun in the same place when it expands past earth's orbit (assuming the moon is even still there, though iirc the timeline for its escape is a bit longer than the sun's timeline for swallowing earth).