Once you have wool in the colors you want, then you have a vast array of choices when it comes to blending it.
If you want, you can actually just spin the wool white and dye it after. You can do it a solid color or make stripes by handpainting it. This produces fine results, but it seems to spoil some of the point of spinning it myself -- that is, the much wider variety of color effects you can do when you're spinning, and also the sheer joy of watching pretty-colored yarn wind onto your spindle.
The next simplest thing is to make a roving or rolag and handpaint that. That is to say, that's what a lot of people seem to be doing. You can spin it all as it comes in the roving, or you can split the roving lengthwise and use a piece for each ply so that the color shifts in the different plies match up. Or you can split it some other way and deliberately have the color shifts not match up. If all the colors go together well, it's actually a neat effect -- like one set of stripes overlaying another set of stripes. Where your two plies are different colors, the colors seem to blend, producing a heathery orange effect even though you know you are seeing red and yellow.
Because I like to start from the very beginning, what I wanted to do was to dye the wool in different batches and then blend it myself as I was processing it. There's a lot of ways to do this too. People who have a blending hackle can put all the different colors on there and then pull it off with a diz into a nice little roving -- like a handpainted roving, except that the different colors will shift into one another a bit more gradually, and you have more control. I don't have that kind of equipment though, just handcards.
I discovered, while trying to make a blue and green yarn and winding up with turquoise, that if you take two colors and card them together, you can mix them together completely. Sure, if you get close, you can see the hairs are different colors, but from even a foot away, it looks like a complete blend, as if you'd blended paint.
Why would you do this instead of just dyeing the wool the color you wanted? Well, some people like the greater depth of color in blended wool. Another factor is that dyeing can be iffy business, especially if you're using natural dye, and it's nice to know that the not-quite-right yellow you accidentally got can be mixed with some blue and give you a nice green.
I found that if I wanted clearly visible variegation, I could only card once or twice. So it worked best to card the different colors separately until they were smooth and even, and then blend them together on the carder into striped rolags.
Kind of hard to tell in the picture, but this is the brown, green, and yellow wool from last post. Each rolag has visible bands of the different colors, and those show up in the yarn. If I were making a chunky yarn, I'd probably have a couple of feet (translating into a small group of stitches, if you knitted it) of each color. Since the yarn is very thin, each band of color gives me several yards.
Then, of course, I'm going to ply it. Since the rolags are pretty random and don't match each other, the plies won't match up. (I could make them match by Navajo plying, which is a neat little technique that lets you keep the color changes together.) So the resulting yarn, when it's knitted up into socks, will look heathered, but with changes from row to row -- a row or part of a row that's yellow and green, and then a bit that's green and brown.
This yarn, which is Icelandic dyed with red, orange, and yellow food coloring, is another example. This one, I experimented a lot with blending methods, but overall the color changes are much longer than the green yarn. There are 10-30 yards of one color at a time in each ply. The result will be much bigger stripes and blocks of color -- but still heathered within each stripe, because the three plies of the yarn don't match up. So there might be an inch in the finished item that's red and yellow, and then an inch that's orange and yellow, giving an impression of a lighter orange. However, it's deliberately pretty random, so there won't be consistent stripes.
In this yarn, I thought that the green I started with was too bright, so I blended in some llama fiber. That dark forest green? That is bright green plus brown, very thoroughly blended. I made a whole new color, and though you can tell it's not a completely solid color, it doesn't look like bright green and brown anymore.
Here, I blended green and blue in a gradient -- first, just green, then green with a little blue blended in, then a lot of blue, and finally all blue. The rolags aren't so throroughly carded as to make one color; there were chunks of blue and of green in the rolag and you can see them in the yarn. Since I didn't want a heathered effect with the different plies, I Navajo plied the yarn.
Color blending is a little intimidating. It's hard to get the results you want in the roving, rolag, or batt; then it's hard to imagine what the yarn you get might look like. At every stage you have control and can do a number of different things with the same materials, but it requires a good bit of imagination to picture what might give you the results you want. All I can say is, it's been nice making a wild guess and seeing what I end up with. The more I do it, the more clearly I can predict what it might take to get a certain kind of finished project.