What is a portmanteau word?

The first use of the word portmanteau in connection with vocabulary appears in Lewis Carroll's Through the Looking-Glass (1871). 

Humpty Dumpty is explaining the meaning of the nonsense poem, Jabberwocky, and how it combines words to create new ones:

Well, “slithy” means “lithe and slimy”. “Lithe” is the same as “active”. 

 Many of Humpty's words are invented and only exist in the story.

French origin

In French, porter means "to carry" and manteau "mantle, or cloak". The combination creates a new word meaning something to carry clothes. 

In English, this word became associated with a specific type of travelling bag that contains two sections.  Humpty uses this to explain how words like chortle (chuckle + snort) are created:

You see it's like a portmanteau—there are two meanings packed up into one word.

What makes an effective portmanteau word?

The phonetical element is often the key to a memorable portmanteau word. Splatter, for example, combines the sounds of splash and splatter

As most neologisms draw on existing words, there are large numbers of new portmanteau words appearing all the time. Some become universal (Brexit) but many quickly become obscure (Grexit).

Here is an extract from my contribution to the Macmillan tribute: Your Favourite Portmanteau Words:

There are plenty of awful portmanteau words. Step forward jazzercise (Jazz exercise) for example, or, even worse, dramedy (dramatic comedy) which surely must merit a prison sentence.

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