The Block Palette is the area in the middle-top hand side of the Scratch program where blocks can be dragged from. These blocks fall under the following categories: Motion, Looks, Sound, Pen, Data, Events, Control, Sensing, Operators, and More Blocks.
Blocks can be dragged and dropped from the Block Palette into the Script Area. When you drag a block from the Block Palette, a copy of it follows the mouse until you "drop" it where you need it. Dragging a block from the Script Area to the Block Palette will delete the block from the Script Area.
Right-clicking a block in the palette will give you a drop-down menu with two unique options on what to do. The first option found here in the palette is "duplicate", which allows one to duplicate the block and any blocks below it, hence its name. The second selection that can be found here is "delete", which can be used to delete the block and all of the ones below it.
The block palette is also the area that allows you to show or hide Stage monitors. This can be done by clicking the check-box next to the monitor.