The Video Block allows you to add a video to your content. You can select a video that you've previously uploaded to your Media Library, or you can upload a new video. You can also just specify the url for a video if you know it.
Once you've added your content to your block, there are further options available in the Settings Sidebar. You can set the video to autoplay and Loop, as well as mute the sound. You can also hide the video controls (i.e. Play/Pause, fullscreen buttons etc.) and specify a poster image for the video. This latter option is really useful if your video doesn't include it's own thumbnail image.
It's important to note that this block is different from the YouTube and Vimeo Embed blocks. If you want to embed a video from YouTube or Vimeo, then you should insert the YouTube Embed Block or the Vimeo Embed Block. If you try paste a YouTube or Vimeo URL into a Video block, it will automatically convert the Video Block to a YouTube Embed Block or a Vimeo Embed Block, as appropriate. The same goes for other video sharing services such as VideoPress. If you try to insert a VideoPress URL into the Video Block, the block will automatically convert to a VideoPress Embed Block. If your block converts to one of these Embed Blocks, you wont have the same options available to you in the Settings Sidebar as you would for a Video Block.