I've often tried to define the differences between a decent paintjob, and an amazing paintjob. There are, in fact, many different elements that go into elevating one person's painting over another's. One of those aspects that stands out for me is how well the blending has been done.
The ability to achieve seamless blending is what I consider the foundation to your painting skillset. I don't care if you can freehand a replica of the Mona Lisa on a grain of rice if the transitions in shading / highlighting are rough, choppy, and sloppy. If you don't care enough to work on your blending, that means you haven't worked on your fundamentals enough.
One of the basic tenets of miniature painting is the idea that these are miniature scale representations of a full scale person / tank / monster / whatever. As such, exaggerating the contrasts in lighting are essential to maintaining the illusion that this model is larger than it really is. Smooth colour transitions help trick the eye into believing that the 10 - 20 shades of red on a miniature's cloak is really one shade of red, with the natural lighting creating all those different tones.
It's like this... imagine a computer image of your model. If you used 40 different tones / saturations of red on your model's cloak instead of just 2, you could achieve a much smoother, richer, and realistic illusion of how light falls on a full scale model. Now, I'm not saying that you need 40 different pots of every colour in your paint collections (although I've heard that that's exactly what Slayer Sword winner Bobby Wong used to do), but with a few pots of paint and the proper application of various painting techniques and tools (wet blending, feathering, progressive glazing, airbrushing, etc.), you can achieve pretty much the same effect.
If you have a look at some of top miniature painting artists (this link is a pretty good place to start checking them out), one thing they pretty much all have in common is the strength of their blending skills. Now, from my research, each artist has their preferred method for achieving this, but whatever your style, you need to practice like crazy, patiently accept your failures, and keep working on improving this skill. No one nails perfectly seamless blending on their first try, and part of the reason I'm in awe of buttery smooth blends is that it represents just how hard the artist worked at getting better. It's something I consider myself reasonably skilled at, but acknowledge that I'm nowhere near as good as I could be.
To that end, I'm currently experimenting with wet blending, two brush blending (somewhat the same thing), airbrushes, feathering, progressive glazing, and a few other techniques. Each one has it's challenges, and I'm starting to come to the conclusion that eventually, my preferred technique will be a fusion of all of the above. One recent breakthrough for me was when I came across someone's blog, stating that they observed the Massive Voodoo team "blocking-in" rough shading with some sort of feathered / wet blended techniques, followed by progressive glazes to smooth it all out. I tried it out, and it seems to be working great so far.
I could go on and on about blending, but right now I've got to go. I hope this has sparked something in your mind about painting, and perhaps lit the fire of inspiration. Let me know your thoughts on the subject, and I'll put more stuff up about it later.