just combine two independent characters together, and you'll get the word(of course you have to confirm this word does exist in dictionary first, after all every two characters can't be combined together).
For example, combine 浴(shower,bath) and 室(room) together then you'll get 浴室(bathroom). Also, combine 硬(hard) and 木(wood) then you'll get 硬木(hardwood). This is easy, isn't it! But remember not to abuse them and make strange words!
As for the pronunciation, 99.9% of characters just maintain their original tone, only very few have tone changes. Two examples are "一" and "不". "一" can be pronounced as "yī", "yí" or "yì" according to the tone of the character following behind it. "不" can be pronounced as "bú" or "bù" as well. Besides, when two third-tone characters make up a word, the first character is transformed to second tone. For example, "老鼠" is pronounced as "láo shǔ" rather than "lǎo shǔ"(but you should write "lǎo shǔ" when label the pronunciation of this word). The reason to do this is simple, because you'll find it hard to pronounce two continuous third tones when you try to read them fast!