Every item has some physical parameters - for instance, the sword may be sharp or rusted, an armor can be strong or weak and so on. These differences from regular items display as special modifiers. Some armors are better than others and some blades deal more damage. But all these items regardless of their differences are lifeless. They have no soul and they all are just usual items without much differences from all others.
Items which have a soul are totally different. The soul gives additional properties to an item and powerful souls may give really wondrous properties to items containing them.
You can extract the utmost essence of an item preserving all it's soul properties by using special tools. The item is irreversibly lost in this case but you keep the soul that can be added to another item.
Souls remember the item type they have been extracted from that means you can't add a sword's soul to a shield. But if your items are of the same type there are no issues with combining their souls.
There is a common mistake thinking that magic, rare and unique souls are different but that's not true. Any unique item soul can be combined with a magic item and vice versa.
Soul's properties can be modified by transmuting it in the Horadric Cube and the soul can either preserve it's quality (the rare transmutes to the rare) or even make it better (the rare becomes the unique).
Set items are created together and therefore these item's souls get additional properties if used by the same person simultaneously. There is no way to create an item with souls combination properties as these properties are kept only during the set creation and assembling.
It seems sometime the soul can be added to a regular item as you can see when Charsi makes an imbue for you but this process is obviously a difficult and complicated task that requires very special unique tools or materials.