They can deal on hit damage (per block), but its extremely small, around 5 damage which will surely be lowered by armor, enchantments, haki and so on, so if you're firing it against a max level enemy it'll most likely deal nothing.
The benefits of the ability can be the suffocation or just making walls of protection or generally making a mess around the fighting area causing confusion., NPCs are more affected by this since most of them might not have abilities with big explosions to potentially free them, but it also matters on your enemy, a mink black leg user for example will have no way of getting out of there without manually mining the blocks, perhaps those few seconds might give you time to max charge certain other abilities (like dai enkai or el thor for example).