"It's been unbelievable, the good start of the year, no words to describe this feeling", Mertens, who was unable to participate in the Australian Open qualifying last year as she was still involved in the Hobart International, said in her on-court interview.
In contrast to Nadal's easy progress, world number two Wozniacki survived a huge scare against little-known Croat Jana Fett.
"I feel good. I think being nearly out of the tournament, you have nothing to lose after that", Wozniacki said.
"I played really well from being down 5-1".
"I was just trying to stay with her in the third set and I managed to get that break and get some confidence".
Kontaveit will face Spain's Carla Suarez Navarro in the fourth round after accounting for a wounded Ostapenko, who took a medical time-out after dropping the first set.
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Caroline Wozniacki breezed into the quarter-finals of the Australian Open with some magical tennis but it was a point she lost in the match against Magdalena Rybarikova that the Dane cherished the most.
Suarez Navarro has reached the quarterfinals at a major five times, but is yet to make the semifinals. I know how tough she is. Obviously she's back playing really well. "She has a lot of experience on these rounds".
After unsuccessfully serving for the match, Mertens broke Martic's service in the 11th game and then held to love in the last game.
With momentum on her side, Mertens was more clinical in the second set as she converted three out of four break point opportunities to close the match in under two hours.
The 22-year-old ended up winning at Hobart last year for her first WTA title and finished the season in the top 40.
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