/candrabindu / चन्द्रबिन्दु

The /candrabindu symbol (~ ँ) is written above or after a letter. It shows that the letter has noseleak. As for instance, bu~ बुँ is almost the same sound as bu बु, the only difference is that some air leaks thru the nose while you say the u उ.

You can hear a nasalized vowel in sUtra U~. The lips do not close while you say U~ ऊँ, and that is why it is written as U~ ऊँ, not as Um ऊम् or anything.

In sUtra puMsosuG you can hear puM पुं sung with a hum, a different nasal sound, said with closed lips. That puM पुं is written with a dot above pu पु, not with aa halfmoon.

Hm, that bu~ बुँ letter looks as if the small moon where above the ba ब letter. May I noseleak while I say the b ब् too?

No. A b ब् with noseleak sounds m म्.

I have read many Sanskrit books, but I haven't seen that /candrabindu anywhere.

It is seldom needed, and, when needed, it is often misspelled. Outside the vedic literature, it is needed only when sUtra torli makes a nasal l~ ल्ँ sound before l ल्. The combination must be pronounced l~ ल्ँ + l ल् and spelled l~ ल्ँ + l ल्, like in —

tAn तान् + labhasva लभस्व → **tAl~labhasva ताल्ँलभस्व "get 'em!"

However it is often mispelled as tAMllabha तांल्लभ, tAllambha ताल्लंभ, tAlMlabha ताल्ंलभ. This happens because most indian keyboards lack a halfmoon ~ ँ symbol.