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The really big problem with blocking is that it introduces very visible artifacts in dark backgrounds and that they're a type of artifact that draws your attention to them. Part of the problem here is that 8 bit SRGB isn't quite sufficient to prevent visible banding without dithering in dark regions, so whne you add blocking artifacts to already slightly visible banding the result turns into a jagged attention grabbing mess.

Deblocking is inelegant but blur is a much less noticeable artifact than blocks. That said the best answer turns out to be having the input image in 10 bit, and having encoders/decoders work at higher internal bitrates which allows for the encoder to make smarter choices about what detail is real, gives the decoder some info from which it can more intelligently dither the decoded image.

IIUC AV2 is trying to resurrect the Daala deblocking work. I think Jpeg-xl also has some good stuff here (but I don't remember exactly what)