Small Blocks are used to buy swords from King Block. To find him, travel east from the castle and cross the river. Go north and use the Wire Rod to cross the river back to the west to find his cave. You'll need a total of 88 Small Blocks to get all the swords from King Block. There are two methods to farming Small Blocks. The first one is repeating the Tirnaco's Errand Blockout mini-game (it's a bonus level) with a perfect clear, which nets you 2 Small Blocks every time (only 1 if you just clear it normally). The other way is to kill Crystal Slimes and Blue Dragons, both of which are rare spawns that show up on maps; keep switching screens until one of them shows up. They don't drop them all the time, but they do drop them.