Compounding and blending are two of many word formation processes in spoken and signed languages.
Compounding is the most common type of word formation process. It is the combination of two (or more) words in order to form a new word. Compound word is a single word that is made up of two (or more) root or free morphemes.
For example in English, butterfly, homework, lighthouse and breakfast. The words butter and fly are two root morphemes. Other examples in ASL are as follows:
Left image: home+work, meaning homework.
Right image: eat+night, meaning dinner.
Blending is another word formation process that blends two words (or two morphemes) to form a new word called a portmanteau. Portmanteau is a word that is formed by merging two different words.
Examples in English are: brunch (blend of "breakfast" and "lunch"), smog (blend of "smoke" and "fog"), motel (blend of motor and hotel).
Many neologisms (newly created words) are blended words. Below is a few more examples of neologism in English by Paul McFedries:
awkword: a word that is difficult to pronounce.
thirty-second surfer: a person who channel surfs during a TV commercial.
corplaining: griping, grousing, and otherwise complaining about the corporation you work for.
agressocracy: a society in which the most aggressive members rise to the top.
More examples from another source, "incompetech", are:
treeware: hacker slang for documentation or other printed material, such as books.
blamestorming: sitting around in a group, discussing why a deadline was missed or a project failed, and who was responsible.
In sign language, an example is ageless which is not only a portmanteau but also a neologism (an ASL word coined by Jolanta Lapiak).
The portmanteau ageless above is a blend word of the two ASL words as shown below: age and forever respectively.
These two ASL words age and forever are blended to form a new portmanteau ageless. As it's a neologism, it's not commonly known in ASL.
Another example of a portmanteau word is EYESORE. It's a blend of EYE and SORE. It was also a neologism which has become an accepted use in ASL community in a region.
morphology in sign language linguistics.
Also see word borrowing in sign language.