What is "blending" actually - and how do you know when you're 'done' blending!?

Blending generally means the moving around of pigment particles across and area of the skin so that the pigments blend together with other pigments, or so that the pigment application gets so thin that it becomes translucent and the skin shows clearly through the pigment layer. Blending is done by makeup artists when they want to change the dispersion pattern of the pigment to help suggest a three dimensional shape or soft edge to a pigment application.