Blending in general is the process of overlaying two or more images such, that any image contributes a certain amount to the result image.
There are at least two relevant usages of blending:
To process a stack of images where differently exposed or differently focused parts of the images contribute to the result:
F.e. enfuse does both blending types.
To avoid visible seams between adjacent images of a panorama. This is currently best done with a multi resolution blender like enblend, smartblend or the PTGui internal blender. This blending type is inherent part of the stitching process.