In form of a bar notification at the top of the page, when a user goes to follow or tweet a user that is blocking them, they will be informed that they cannot do so -- "(because they're blocking you)".
Twitter only used to inform you that "something went wrong" when a blocked user attempted to re-follow that user.
While Twitter does not actively inform users that they have been blocked from following, replying to, or direct messaging other Twitter users, it does state that users "may notice".
I'm sure there are a tonne of third-party applications that could tell you through simple means whether a user has been blocked.
But for Twitter to outwardly and overtly state, in rather a blasé way, that a user is blocking them cannot be a bug in the system. Someone has written that into the code and clearly makes no bones about it.
For the record, I don't blame @arrington from blocking me on Twitter. Suffice to say, I could have been nicer.