Blocking is generally done for quilts that will hang, either competition quilts or wall quilts, not so often for bed quilts or quilts that will be washed often. It makes them hang straight, true, flat and square, but only lasts until the quilt gets wet again and then it reverts to its 'natural' state.
Wet blocking, where the quilt is washed or soaked, and dry blocking, where the quilt is sprayed or steamed, are the two main ways to block a quilt.
There are many great tutorials available online and in books, but some of the best are:
Quilt University
http://www.quiltuniversity.com/blocking.htm
Leah Day
http://www.daystyledesigns.com/blocking.htm
Possibilities Quilts
http://www.greatamericanquilt.com/pd...gyourquilt.pdf
Blocking is done before the binding is sewn on so that you can trim the quilt square before attaching the binding. Because blocking only lasts until the next time the quilt gets wet, this final trimming and then binding helps ensure the 'natural' state of the quilt is as accurate as possible.