In this timelapse I start the foundation of colouring the illustration, and do the shading before incorporating the actual colour theme. Using the lasso tool and fill tool primarily, I combine softer shadows with solid harsh shadows for different lighting effects.
For the blending effect I mask out some of the harsh edges with a soft round brush, and play around with brush modes.
In the stage where I do highlights and lightening brush strokes, I use the overlay layer mode with a soft round brush as well, playing around with the opacity until it gives an ethereal look.