A block is a union of properties inside the game. It has a functional size of 1m³. The world is built out of blocks, so you can create things like castles easily and confortably. Mods may change this fixed block thing and add subblocks or rotatable systems.
Each block however is part of a reference system, e.g. a big ship, the world itself, a rotating carussel, ... just let your imagination running. The basic game supports 12700 different blocks/items where a block never should use two ids for a two different states if the behavior of the block stays the same.