Earlier quoted context omitted.
Contact binaries are fairly common. Expected to make up about 10-15% of NEOs. My layman's understanding of how Kuiper object contact binaries develop is mutual capture during the early life of the solar system and angular momentum decay until they come into contact.
Can you say more about how angular momentum decays in orbital mechanics? I understand that, because the Earth rotates faster than the moon orbits, our tidal bulge will be ahead of the sublunar point, and will accelerate the moon in its orbit. Are there any other ways to get rid of angular momentum?
Another is the "YORP Effect". Sunlight falling on an asteroid produces a slight thermal radiation pressure (push). If, due to asymmetries in asteroid shape/albedo, the net radiation pressure force is not aligned with the asteroid's center of mass, it will produce a torquing force which will cause the asteroid to spin faster (or slower) over time. Applying the idea of YORP Effect to binary asteroids yields the "BYORP [Binary YORP] Effect", by which the orbital dynamics of the binary system are modified by this asymmetric radiation pressure over time, in a way that either pushes them together into a contact binary or apart into two unbound asteroids.
It's even hypothesized that some asteroids may be in a binary/contact-binary cycle on long timescales! There are solutions to the above in which the BYORP effect causes a loss of angular momentum in a binary pair, causing them to merge into a contact binary - but the contact binary may settle into a state where the YORP Effect actually causes the newly merged asteroid to spin faster, eventually flinging them apart due to centripetal forces... back into a binary state where the BYORP Effect may again cause them to merge someday.
Recommended reading: https://arxiv.org/abs/1010.2676
