What is blocking? Well, it is a term used to describe the planning of a scene. You 'block out' the scene working out who stands where, where they move etc., I like to think of it as choreography, the way dancers work out the steps in their dance. It is the process of planning and practised for it to work on the night. Of course in drama, you don't want it to be as restrictive as a dance choreography, but I see it more as a way of enhancing the actor's performance.
Here is a fictional example:
Scene: You have a teenage girl who has just found out her dad knows about the money she stole from his wallet.
She has a few lines to perform. You give the actor the motivation and background to the character. You rehearse with her and work out the emotion. She is sat on her bed when she performs these lines.
"Action" and away she goes. It's ok but it feels a little bit empty. Like something is missing. Is it her acting? Probably not. Actor's are not magicians. They are people and although they are 'acting' they have to relate every performance to something in their own lives. What do you do when you're worried or upset? I find something to do. I wash dishes. If my husband and I are having an argument I can't just sit there, I have to do something: watch TV even though I've no idea what's on the screen or start tidying up. Sometimes I just play with a pencil while we talk it out.
Blocking Gives Motion to the Emotion
What if we give our actor in this scene something to do while she talks? Give her a hairbrush or tell her to be packing her school bag. It's amazing when you give the character something to do how it improves the performance and creates more emotion. Why? Because it gives another vessel for the actor to channel the emotion through. We hear her say she is worried about what her dad will do, but the action of her twisting the hairbrush in her fingers until her knuckles are white is far more emotive.
I think blocking essentially provides emotional dynamics for the scene.
Blocking Can Help With Speech Flow
It can also help the actors with their lines. Knowing you will end up near the bookshelf at the words, "Dear me, Margery!" helps them remember which line comes after that. It's like leaving little physical markers throughout the dialogue that are jogs the memory of your actors.
Blocking Can Allow The Camera To Tell The Story
Working out where the actors are going to move and stand through a particular scene can really help you tell the story with the camera. It will help you work out where the camera should be at various moments and knowing that the movement is planned makes it much easier for your camera op. Once you have it blocked you can then play around with framing and tracking, using the camera to enhance the scene. If you know actors A and B will move from the kitchen to the living room during a dialogue, you can maybe film the scene in one moving shot, tracking backwards, or end the scene with actor B's face close to the camera because the power has shifted to them during the course of the dialogue.
From my personal experience with actors, they aren't usually super keen on blocking and a lot of people consider it old fashioned. I think it depends. It depends on the story, on what type of film you are shooting, on the actors you are working with and how well they take to the script. Whatever the case, I believe time should be spent on blocking, even if it gets thrown out of the window later because the actors do something better. Don't get stuck in rules and regulations but keep it in mind.