What is it called when you add 'im' to 'possible'?

I took the ESL certification test and I was wondering: what is it called when you add 'im' to 'possible'?

It's funny because you tagged this question prefixes — well, adding im- to possible is called prefixation.

(Making a word have the opposite meaning by adding a negating prefix is also a form of negation.)

Adding a prefix to a word is called prefixation, as Kosmonaut pointed out.

A further point: as several dictionaries say, impossible comes from the prefix in- and possible, so why is in + possible = impossible, rather than *inpossible?

The answer is that in- becomes im- before words starting with 'p', 'b', or 'm' (as in impatient, imbalance, immature, etc.), because of a process of euphonic sound change known in Sanskrit as sandhi (pron. "sun-thee"), a term that appears to have some currency among general linguists as well. Specifically, it's a form of internal sandhi (the kind that would be called parasavarṇa sandhi in Sanskrit, but I don't know the equivalent term in English linguistics).

To add a prefix to a word is called prefixation, as Kosmonaut points out.

To add any kind of affix (prefix, suffix, infix, circumfix) to a word is called affixation.

To form a new word out of another word by means of affixation is called derivation or sometimes agglutination.

The semantic process (effect on the meaning) is called "negation" or "privation".