Coalescence dynamics of two equal-sized droplets coated with a fixed number of particles is numerically investigated using the lattice Boltzmann color-gradient model coupled with particle dynamics. By varying particle distribution range, we first show that the addition of particles can retard droplet deformation, and even in the absence of particles in the growth region of liquid bridge, more particles distributed at the axial ends of droplets significantly hinder droplet deformation. This is mainly because high kinetic energy region, which is concentrated at the axial ends of the droplet, is inhibited by particles in this region. We then vary the viscosity ratio of ambient fluid to droplet and find that for a moderate viscosity ratio, decreasing the particle distribution range causes the droplet oscillation mode to shift from critically damped to overdamped. In under-damped mode, droplets are able to reach steady state earlier with a decrease in particle distribution range, while an opposite trend is observed in overdamped mode. We also demonstrate that in addition to introducing particles, the reduction of particle distribution range equally contributes to increasing apparent viscosity of ambient fluid. Finally, it is found that as the contact angle decreases, the damping ratio of droplet oscillations increases due to increased viscous dissipations and thus the maximum kinetic energy that the droplet can achieve decreases. As the particle distribution range increases, the effect of particles on droplet oscillations weakens, gradually making total kinetic energy and droplet deformation evolution curves for different contact angles indistinguishable.