We present an analysis both of the nucleation and growth of two-dimensional (2D) islands or clusters during deposition of Ag on Ag(100) at 295 K and of the subsequent postdeposition equilibration of such island distributions at coverages below about 0.25 monolayer. Island formation during deposition is shown to be effectively irreversible, and the island density and size and separation distributions are characterized using a combination of scanning tunneling microscopy (STM) and high-resolution low-energy electron diffraction. Postdeposition coarsening of the adlayer is monitored via STM and is shown to be dominated typically by diffusion and subsequent coalescence of large 2D clusters rather than by Ostwald ripening. Tailored studies of such coarsening elucidate both the kinetics and the underlying cluster diffusion process.