A Block is large group of keys (2^28 keys). This is the basic unit of measure for the RC5 project. This is also the same thing as a Work Unit (commonly abbreviated here as WU). Block == Work Unit.
A Packet is a group of Blocks (from 1 - 32). You setup the size of the packets that you would like to receive in the client configuration. The current client (2.8012-465) allows packet sizes between 2^28 (1 WU) and 2^33 (32 WUs) keys. By default the client will automatically select the packet size, which usually ranges from 1 - 8 blocks(WUs). The keyserver is not required to give you packets of the requested size, but it will try its hardest. As far as I know, Packets exist for Net traffic reasons, since Blocks are so small in file size. If you look at the visual output on the client while it is running, you will see a percentage complete progress meter. This is the percentage complete for the current packet, which can contain from 1 - 32 blocks. Note: It does not hurt to have a Packet with 8 Blocks compared to having a Packet with only 1 Block. Technically, it is slightly faster to have Packets with more Blocks, because the client can dump (and retrieve) Blocks faster, since Packets are sent one at a time. Plus, there's a slight delay to unload the current packet and load the next one. [/Rold Gold]