Character and monster buffing
it can keep on going until nobody can/wants to throw any more cards. As seen in the rules(example, p. 5):


   Example of Combat, With Numbers and Everything
  
  Aric is a 4th-Level Warrior with the Chainsaw of Bloody Dismemberment
  (which gives him a +3 to his combat strength). He kicks open the door
  and finds the Net Troll, a Level 10 monster. Aric’s at a 7, the Net
  Troll is at a 10, so Aric is losing. 
  
  Aric: I was hoping to save this
  card . . . 
  
  He plays the Magic Missile, giving him +5 for this fight. Now his combat strength is 12, beating the Net Troll’s 10.
  
  Aric: Ha! Net Troll going down!
  
  Suzan: Not so fast. Now he’s Enraged. 
  
  Suzan plays Enraged, adding 5 to the Net Troll’s combat strength. Now Aric
  is losing, 15 to 12.
  
  Aric: Curses! 
  
  Suzan: Want some help? (Suzan is playing a Level 2 Elf with the Boots of Butt-Kicking, so her combat
  strength is 4. Combined with Aric’s 12, they would have 16, enough to
  defeat the Net Troll’s 15.)
  
  Aric: And give you a level? Not a chance! I’m Berserking. 
  
  Aric uses his Warrior power and discards three cards:
  Thief and a Wandering Monster from his hand, and Yuppie Water (usable
  only to help an Elf) from his carried items. Each one gives him +1 to
  his combat strength. 
  
  Suzan: Not the Yuppie Water! Noooo . . . 
  
  Aric: That’s +3 to me, and now we’re tied, 15 to 15. Because I’m a Warrior,
  I win ties . . . so I’m killing the Net Troll unless someone else
  plans to mess with me. Anyone? 
  
  No one says anything, so Aric goes up a
  level and claims the Net Troll’s treasures – three from the Net Troll
  card, and one extra because it was Enraged. And the game goes on . . .


As you see, you can cast any number of spells during combat.