Blends are a human-zombie sub-species; they are living people who acquire zombie-like traits as a result of receiving a bite from Murphy (becoming a “blend” of human and zombie). Blends are immune to the zombie virus, and are also no longer viewed as a food source by zombies. Blends also seem to lose any sense of fear and doubt, they are usually completely loyal to Murphy, and show very little will of their own; rarely even speaking, except as a response to Murphy, or to his commands.
From Murphy's perspective, there are two main reasons to create Blends: to protect them from becoming zombies, and to obtain obedient followers. It is even possible to prevent a person bitten by a zombie from becoming one by making that person a Blend instead, although the side effects are severe.
The concept of Blends is first hinted at in the second half of Season 1, but fully developed in early Season 3.