What is a portmanteau word?

The first use of the word portmanteau in a vocabulary context 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, the word became associated with a specific type of travelling bag with 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, many new portmanteau words appear all the time. Some become universal (Brexit) but many quickly become obscure (Grexit).