Blocking is sometimes necessary when someone is behaving as an abusive troll, or switches from normal conversation to hurling personal abuse.
Yes, it can be abused by people who think that having the last word is "winning". One way to address that might be to add "Fred blocked Sam" to a thread in which both Fred and Sam previously posted, so everyone knows what happened.
The feature is more commonly abused (on reddit) as an aggressive tactic by abusers. The person being "blocked" tends to be the target of abuse. This is because of some really bizarre oversights in how the feature was implemented:
Once you have been blocked, you cannot block back (because reddit no longer shows the user who blocked you as existing, while you're logged in). So if you want to harass someone, the best thing to do is to create an account and block them immediately.
Not only can a blocked person not respond to a blocker's comment or post, but they also cannot respond to any descendent of said post. Thus, on a small subreddit, or on popular posts in a large one, it's possible for a blocking peer to essentially "ban" you from the conversation at large.
By repeating this technique in the same subreddit, it's possible to gradually manufacture false consensus by preemptively silencing folks who would disagree with you. This user did an excellent study/proof when the new feature was launched:
How about only a silent mute but no block? Then you can protect yourself if you don't want to see it, but to use it as a weapon, you have to convince them you've really muted them - and they might not believe you, so it's weaker. Just like old Usenet and mailing list's *PLONK* message.
Yes, it can be abused by people who think that having the last word is "winning". One way to address that might be to add "Fred blocked Sam" to a thread in which both Fred and Sam previously posted, so everyone knows what happened.