What is a "blocked address"? Who is blocking it?

Are you sending to discrete addresses, or using a Mailing List?

A blocked address, as far as I can determine, is an address that the owner has set to not receive emails from a specific address. I.E I do not wish to receive emails from your address so I block your address.

I assume by discrete addresses you mean each address is individually entered. Yes. They are separate, not part of a list.

When you send to a list of addresses, Thunderbird calls the outgoing mail server and asks to send mail to the list of addresses. If the server test an address and it is bad it closes the connection after advising it is bad. So it is not Why do not Thunderbird, as Thunderbird can only do what the server will allow and continue is not one of the options.