OK, let see here.

When off power: The diff will run as a normal diff would, either wheel rotating at their own speed.

On Power: The blocks act in a way similar to runing thick oil in the diff. The blocks dont move, the gears dont bind. But the presence of the blocks around the planetary gears means that the oil doesn't have the room to move that it would in a stock diff. This lack of flow around the gears locks up the diff, it still slips a bit between sides but if you were to try and hold a wheel still, you'd struggle, as opposed to a stock diff where the other wheel would just spin twice as fast.