Building blocks is the feature associated with experience fragment in which we group two or more experience fragment together.
To understand it better we have to first understand the experience fragment. Experience fragment is a page or post, which we create using multiple small contents or grouping multiple content together in a template so we can easily reuse and publish that content. Experience fragment can have CTA(cal to action), images, text and inputs.
Why building blocks required?
Suppose we have a requirement where we need to show two or more experience fragment together as a single experience fragment, then using the building blocks we can group those experience fragment and drop and show that building blocks as a single experience fragment in your post and page.
To make it more simple, building blocks is for combining two or more experience fragment into a single experience fragment.