When you block a site, results from that domain name disappear from your search results, whether it's a site you just don't like, or a content farm spamming Google results. Ostensibly, the extension is partly a response to the latter, which Google's come under fire for over the last few weeks as ever-more-efficient content infest and dilute more legitimate search results.
Consider, though, a Google where you're no longer presented with search results that conflict with your worldview. Maybe a diehard creationist blocks search results for science sites that talk about evolution, or an Obama supporter no longer forced to look through results that feature sites criticizing the administration's policies. I won't go so far as to say it's scary, the idea of a Google that constantly and only reinforces your belief system—people filter their internet experience and ignore search results all the time, looking for whatever it is they're looking for, sticking to the same sites they always read—but the idea of an internet that never disagrees with you is pretty wild. [Chrome Extension via Google Blog]