Purely because of the number of cables that would have to go through the wall. You have 2 wires going
into your CU (3 including earth), but a multiplicity coming
out - a 12-way CU with all circuits used, including say 3 ring mains is going to have 15 T/E cables coming out of it ranging in size from 1 or 1.5mm up to 6 or 10mm.
If you put your CU outside the house, you'll have to take 15 cables through the wall.
A service block is simply a plastic box containing a thick metal bar with holes and screw terminals so that you can connect cables together. It's made with big holes and thick bars so that you can use fat cables like meter tails carrying up to 100A.
They are just large, high-current junction boxes - this is what a single pole one looks like inside:
A double pole one is bigger, and has 2 metal bars inside so that you can connect 2 lots of cables together - Live and Neutral tend to be handy.
They are used if you're feeding more than one CU, or a CU and a dedicated shower unit - you take the wires coming out of your meter into the service block (or blocks if using single pole ones), and then you have 4 wires coming out (2L, 2N) i.e. one pair to go to each of your CUs or shower units.
If you are doing this remember you must use 25mm 6181Y meter tails
coming out - just because, for example, you've got 10mm running
from your shower unit that doesn't mean you can use 10mm running
to it, as that 10mm would only be protected by the main 100A fuse - a bit dodgy.