When Redshift uses multiple GPUs, is their memory combined?

No. Redshift does not combine the VRAM when using multiple GPUs.

(e.g. if you have an 8GB GPU and a 12GB card, the total VRAM available for Redshift will not be 20GB)

This is a limitation of current GPU technology and not related to Redshift in particular. We recommend users combine video cards that are fairly equal in terms of memory capacity.

Redshift does support "out of core" rendering which helps with the memory usage of video cards that don't have enough VRAM (see this article). This means that, in contrast with other GPU renderers, the largest possible scene you'll be able to render in the above scenario won't be limited by the system's weakest GPU.

See this article for more details.