I would like to add domain.com is hosted elsewhere and domain.com/blog is at Digital Ccean

You can only host your DNS records in one place, so pick one. /blog is a subdirectory, so it would not require its own DNS record.

So domain.com at one host and domain.com/blog at DigitalOcean is not possible?

Let's make sure we're talking about the same thing, here. When you say "So domain.com at one host and domain.com/blog at DigitalOcean...." Are you referring to two different websites or two different DNS records?

Two different websites.

Main website - domain.com is on a cpanel VPS

I currently have blog.domain.com at Digital Ocean (a Ghost blog on Ubuntu). However, it would be preferable to have our blog located at domain.com/blog.

Create an A record in your DNS control panel, for blog.domain.com, pointing to your DigitalOcean IP address.

"Create an A record in your DNS control panel, for blog.domain.com, pointing to your DigitalOcean IP address. "

I was able to do so, however I don't want the blog in a subdomain (blog.domain.com) I would like it in in domain.com/blog

Ghost doesn't work on a subdirectory so you will have to host it on its own (sub)domain.

So domain.com at one host and domain.com/blog at DigitalOcean is not possible?

That is not possible.