Greek word-formation can be subdivided in two main domains, derivation and composition. Both domains are in general comparatively stable diachronically, as Greek is a remarkably conservative language from a morphological point of view, mainly due to the fact that there is no phonological erosion at the end of the word, which would have destroyed inflectional and derivational suffixes as has happened in most Indo-European languages. An additional factor is the long diglossic history of the language, which has led to the retention of archaic derivational and compounding patterns.
In a similar vein, the diachronic prestige of AG and its influence on European civilization (and thence, European languages) has caused the re-importation of much AG word formation material into MG through borrowing: the so-called “neoclassical” suffixes and neoclassical compounds fit easily into MG and contribute to its overall conservative morphological outlook.
Τhe morphological make-up of Greek words is diachronically stable. They consist of roots (bearers of the main lexical meaning of the word) + derivational suffixes and/or prefixes + inflectional suffixes. The combination of root + affix gives the stem, which is available for further derivational processes, i.e. affixation of additional derivational suffixes. One may therefore distinguish between simple and complex stems. — Angela Ralli
General Rules: The most general rule of Greek word formation is that most derivation and inflection involves suffixes and/or vowel change (usually referred to as “ablaut” or “gradation”). Inflectional suffixes are well-illustrated above; an inflectional use of ablaut is seen in aorist elip-on ‘I left’ vs. present leip-o, and a derivational use inpetomai ‘I fly’ vs. frequentative potaomai ‘I fly hither and thither’. An example of a derivational suffix is seen in attik-iz-o ‘speak Attic’, dor-iz-o ‘speak Doric’, hellen-iz-o ‘speak Greek’, where the (very common) suffix -iz- derives verbs from nominal bases. There is, however, one inflectional prefix, the so-called “augment” which occurs with past tense forms (imperfect, aorist, pluperfect); with most consonant-initial verbs it has the form e-, as in egraphon, egrapsa, egegraphe in Table 7; contractions with vowel-initial verbs give different results for the “augmented” forms. There are also a few infixes, as in the present stem la-m-b-vs. aorist stem lab- ‘take’. Also, reduplication figures in the formation of the perfect, as in gegrapha in Table 7. In derivation, there is the wide use of lexical (content) prefixes, sometimes referred to as “preverbs”, to alter or add to the basic meaning of a root, as in grapho ‘I write’ versus kata-grapho’I register’ (literally “I write down”) versus hupo-grapho ‘I write under’ (cf. hupo ‘under’), etc. Finally, Greek makes extensive use of compounding to create new words, generally involving stems as first members, including noun-noun compounds (e.g. khoro-didaskalos ‘chorus-teacher’), verb-noun compounds (e.g. terpsi-noos ‘soul-delighting’, literally “delighting soul”), and exocentric compounds (e.g. kako-daimon ‘ill-fated’, literally “having a bad fate”), among others.
Other Information: Several changes in morphological categories took place between Classical Greek and Hellenistic Greek. In both the noun and the verb, dual number became increasingly restricted in use, and ultimately was lost. In the noun, the dative case was being replaced in Hellenistic times by various prepositional alternatives and in some functions by the genitive case. In the verb, the optative mood was increasingly on the wane, partly the result of sound changes that led to partial homophony, in several forms in the paradigm, with the subjunctive and, less so, with the indicative). Similarly, the various forms of the perfect (present perfect, pluperfect, and future perfect) were used less and less, eventually being lost. In a change that affected both the morphology and the syntax, the infinitive began to give way in this period to finite subordinate clause substitutes. There were also several changes in the actual form of grammatical endings, due to sound changes and analogical changes within the various systems of endings.
Further discussion by Angela Ralli
Web resource on Ancient Greek word formation