  Gravitational microlensing surveys target very dense stellar fields in the
local group. As a consequence the microlensed source stars are often blended
with nearby unresolved stars. The presence of `blending' is a cause of major
uncertainty when determining the lensing properties of events towards the
Galactic centre. After demonstrating empirical cases of blending we utilize
Monte Carlo simulations to probe the effects of blending. We generate
artificial microlensing events using an HST luminosity function convolved to
typical ground-based seeing, adopting a range of values for the stellar density
and seeing. We find that a significant fraction of bright events are blended,
contrary to the oft-quoted assumption that bright events should be free from
blending. We probe the effect that this erroneous assumption has on both the
observed event timescale distribution and the optical depth, using realistic
detection criteria relevent to the different surveys. Importantly, under this
assumption the latter quantity appears to be reasonably unaffected across our
adopted values for seeing and density. The timescale distribution is however
biased towards smaller values, even for the least dense fields. The dominant
source of blending is from lensing of faint source stars, rather than lensing
of bright source stars blended with nearby fainter stars. We also explore other
issues, such as the centroid motion of blended events and the phenomena of
`negative' blending. Furthermore, we breifly note that blending can affect the
determination of the centre of the red clump giant region from an observed
luminosity function. This has implications for a variety of studies, e.g.
mapping extinction towards the bulge and attempts to constrain the parameters
of the Galactic bar through red clump giant number counts. (Abridged)
