What exactly does an #if 0 ..... #endif block do?

Not only does it not get executed, it doesn't even get compiled.

#if is a preprocessor command, which gets evaluated before the actual compilation step. The code inside that block doesn't appear in the compiled binary.

It's often used for temporarily removing segments of code with the intention of turning them back on later.

It's identical to commenting out the block, except with one important difference: Nesting is not a problem. Consider this code:

foo();
bar(x, y); /* x must not be NULL */
baz();

If I want to comment it out, I might try:

/*
foo();
bar(x, y); /* x must not be NULL */
baz();
*/

Bzzt. Syntax error! Why? Because block comments do not nest, and so (as you can see from SO's syntax highlighting) the */ after the word "NULL" terminates the comment, making the baz call not commented out, and the */ after baz a syntax error. On the other hand:

#if 0
foo();
bar(x, y); /* x must not be NULL */
baz();
#endif

Works to comment out the entire thing. And the #if 0s will nest with each other, like so:

#if 0
pre_foo();
#if 0
foo();
bar(x, y); /* x must not be NULL */
baz();
#endif
quux();
#endif

Although of course this can get a bit confusing and become a maintenance headache if not commented properly.