A portmanteau word is one formed by the merging of two other words. The new word has a new meaning which develops the meanings of the two original words. This is more easily explained by example: "smog" is a portmanteau of "smoke" and "fog"; "brunch" is a portmanteau of "breakfast" and "lunch". In modern linguistics, this is more usually called a blend.
The word portmanteau is itself a portmanteau word. It comes from two French words: porter (~ [to] 'carry') and manteau ('an overcoat'). It has meant at various times 'an official who bears the robes of someone (e.g. the king of France)'; a 'suitcase' (its most usual meaning in modern English); and a 'coat hanger' or 'coat rack', its usual meaning in modern French (where it is spelled portemanteau). In modern English - and particularly in the United States - its primary meaning among linguists may be as a one-word name for what would more properly be labeled a portmanteau word. Lewis Caroll coined this meaning as a metaphor for two words packed into one. There are many portmanteau words in his poem Jabberwocky.