Blending
OK, for example in the mans trousers.
They're actually colored with about five different colours.
Base layer light yellow/cream
Then built up with a darker yellow/light brown
Then with a brown on top.
You kinda have to not worry about filling in all the white, became the layers should get them all.
shading
The shading is built at the same time. I kinda do the 'bottom' edge with a harder push in the same colours, then a light push of the next darkest.
Generally if you go for the edges for shading you'll be fine, just build it up bit by bit... Don't push too hard unless you want a crisp colour.
shadowing
Different in my mind to shading. Shading is for 3-d and showing light, shadowing is for lack of light... Kinda
I use browns greys and Black's for shadowing. So you'll see that the monster on the right crawling on to the boat, the hind leg was blended and shaded the same way as the others,then I did a light black 'wash' over the top to put it in shadow.
Hope that explains it... Its difficult to put into words!