Blocking is for you. Reporting is for the moderators. They solve different halves of the same problem, and you can use either without the other.
Block someone from their profile card, which you reach by clicking their name or avatar anywhere they appear. It is also in the Friends panel, though the profile card is usually where you are when you need it, since the person you need to block is often not a friend.
A block covers more than direct messages:
Blocking is one-directional and private. The other person is not told. Unblock from the Friends panel, and their messages come back.
Report a specific message from its action menu, or report a person from their profile card. Pick a category and add detail if you want to. The categories exist so a report can be triaged at a glance, and so you do not have to articulate what is wrong in order to file one at all:
Reports go to anyone with the moderate-members permission, not to a company. On a self-hosted instance that is your community's own moderators, which is worth knowing before you file one.
The report queue shows the category, your detail, the reported person, the channel, and a snapshot of the message content taken when you reported it. The snapshot matters, because a message that gets deleted afterwards would otherwise leave a report about nothing.
Moderators can resolve or dismiss each report, and the moderation actions that follow are recorded in the audit log alongside warnings, mutes, kicks and bans.
This is the one case that works differently, and it is worth understanding rather than being surprised by.
In an encrypted conversation the server holds no readable copy of the message, so it cannot snapshot one. Instead your client supplies the decrypted text with the report, and it is stored and shown to moderators explicitly labelled as coming from the reporter rather than from the server.
That label is the honest part. The server cannot verify text it never had, so it does not pretend to. A moderator weighing an encrypted-DM report is weighing one person's account of what was said, and they should be able to see that from the report itself.
Without this path, encrypted direct messages would have no recourse at all, which is the real reason reporting shipped in the same release as encryption.
See Roles, Invites & Moderation for the tools on the other side of a report: warnings and automatic mute escalation, kicks and bans, and the moderation log that records who did what.
