A very good question. I'll try to answer it as best as I can. I'm a former New Jersey Transit train dispatcher, but still a railfan. Anyone who has more expertise, please update this post, correct it, or let me know I basically got it right.
A block is not a set length. It varies from railroad to railroad and is dependent upon many factors. Very very simply, block length is determined by train frequency and average train length for that territory. On NJT the majority of blocks were rather short, only a mile or two long and all normal train movements were controlled by Automatic Block Signals (ABS) via Centralized Train Control (CTC). By the way, ABS block signals not only indicate track occupancy, they also indicate train speed.
Now I know you only asked about block length but let me enlighten you to how block length and signaling all fit together.
CTC is a form of train control where a dispatcher controls all signals and interlockings from a remote location. On an ABS/CTC system there is a low-current voltage passed through the rails that controls the signal system. When a locomotive, freight, or passenger car completes the circuit by entering a block it will then display an appropriate signal, not only for that block, but usually for the next block ahead as well. An advantage to this system is that you can have numerous trains running in the same direction, or opposing, at the same time (as NJT does) and yet you can keep them safely spaced. ABS/CTC will know that there are trains on the railroad, what blocks they are in, and will post the appropriate signals to following trains that will indicate to the train crews what speed to follow. Interlocking signals are controlled by the dispatcher and indicate speed and routing through an interlocking plant. These specific details are spelled out in employee timetables along with all the different signal aspects. ABS signals are those with a numberplate (actually it's milepost location). Interlocking signals have no numberplates and are controlled by the dispatcher.
ABS signals can be either continously lit or approach-lit. On NJT they were approach-lit, meaning they were dark until the train was usually two blocks away. Approach-lit signals save on bulb life. They can also help the railfan....if you see an automatic light up you know a train is approaching. If you see all reds the train will be coming from behind the signal you're looking at. If you see any combination of red, yellow, or green the train will be approaching that signal. Once the train is one or two blocks past the signal you're at, the ABS signals will go dark until the next movement. Interlocking signals light up only when the dispatcher sets a route through the interlocking. They also go dark after the train passes.
I hope this answered your question...somewhat. As I stated at the start of the post if anyone with signal experience can add to, or correct anything in my post, I'd greatly appreciate it.