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1.
The combination of a cuddle, huggle, and snuggle. They are used toward people affectionately, such as showing love or friendship, sometimes as foreplay. It may seem very similar to just 1 of the 3 combined phrases, but you will realize a schnuggle when it happens due to the added awesomeness and epicness.
Carmelle: "You are rad! Let's schnuggle under the moonlight.'

Linden: "Totally, I love you!"
by Meatasaurus June 24, 2009
 
2.
Like snuggling, but better.
She really wanted to schnuggle last night, but he wasn't up for it.
by Beckyyyyyy March 10, 2008