As a proof-of-work (PoW) based blockchain, how does Ethereum combat mining pool centralization, which can lead to an entity controlling the majority of hashing power?
There are two primary ways that the existing PoW based consensus algorithm combats mining centralisation.
This portion of the Ethereum mining algorithm, a technique referred to as GHOST, includes the headers only of recently orphaned blocks in return for a reduced reward to both the block producer and the includer of the (otherwise orphaned) block. These included orphans from "grandparent" or earlier blocks are frequently referred to as "uncle" blocks because the gender neutral term "ommer" isn't widely known or understood.
The second way that the Ethereum PoW consensus algorithm combats mining centralisation is by its use of a Proof of Work function that is ASIC resistant. By preventing mining from becoming dominated by specially designed and produced hardware, independent miners are kept competitive or even given an advantage in terms of their profits and/or levels of hardware investment, because they can make use of readily available commodity hardware (i.e. consumer graphics cards).