Compound words are when two or more words combine to form a new single word or a phrase that acts like a single word. There are three different types of compound words in grammar: 1. Open compound words with spaces between the words (ice cream), 2. Closed compound words with no spaces (firefighter), 3. Hyphenated compound words (up-to-date). Compound words have their own meanings that differ from those of the words they’re made of. Compound words function as singular entities in grammar, with specific rules for pluralization and conjugation depending on their type (living rooms, not livings rooms).