It just means "more than one block, but less than three". If someone said something was "two blocks away", I would expect to have to cross two streets to get there.

How far away is 2 blocks?

A block is not really defined by distance, but rather is defined by the distance between cross streets, which could be 50 feet or 200 feet, depending on the place. Most blocks in cities tend to be between 200 – 300 feet apart, so the distance between 2 blocks would be roughly 400 – 600 feet.

What do Americans mean when they say 2 blocks away?

Basically, If you are walking up a North/South running street, the distance between one East/West running street and the second East/West running street would be a block.