When you create your post content in the block editor, you construct it out of blocks. All types of content are blocks in Gutenberg: Paragraph, Image, Heading, Gallery, List, Quote, Audio, and so on. The block editor makes it easy to add, remove and reposition blocks in the post layout. For instance, if you want to create a blog post with some text and images, you could add two paragraph blocks, followed by an image block, followed by a heading block, followed a couple of more paragraph blocks. If you want to move the image block, you can just drag and drop it to a new position in the layout.
Most blocks come with settings allowing your to modify how the contents of the block should be presented. For example, you can change the paragraph alignment and text formatting in the paragraph block, set a caption and image size in the image block, add or remove table rows and columns in the table block, and so on.
In addition to the blocks that come included with WordPress, more blocks can be added by the themes and plugins installed on your WordPress site. In the future, blocks will also replace widgets and menus in the WordPress interface.