We've discussed a number of ways to blend paint, and the Smudge Tool is strangely absent. Why have I left this tool out of the conversation? Beginners often assume that the Smudge tool is explicitly for blending, but in my opinion it is rarely useful for this. This video explores how the tool functions, and highlights special cases where it is useful for digital painting.
Mechanically, painting is very simple: add paint to the canvas, and blend it with the paint that you've already applied. That said, blending technique is a subtle art and can be a lifetime pursuit. This video shows some basic blending techniques for photoshop. And if the brushes aren't working the way you want them to, watch this video on brush controls.