The practice of modifying a model (not limited to toy action figures) to achieve some result other than that intended by the manufacturer. ...
I had to kitbash my Luke Skywalker figure with my Darth Vader figure because Luke was missing a hand.
To modify any project and crap it up with non-stock parts, often with interesting results. Use of existing or scrap pieces (from just about anything) is usually prefered to fabrication of new ones.
My mechanic had to kitbash my two non-working autos into one working auto. We call it "Frankencar."