Total Blocking = (Block * (Dexterity - 15)) / (Character Level * 2)
1) Block = the total from your items and HShield. There is no cap on this, but the display on a shield's inventory pop-up is capped at 75%.
2) Total Blocking is capped at 75%. It is not displayed if below some value (probably 1%). This display is found in the char-screen pop-up for defence, below the %Chance of a monster hitting you.
Some examples (I'll be rounding down numbers) using a level 50 character:
EG1) 100 dex and a shield with 20%Block socketed with 3 Flawless amythests (+3x10%Block)
Total Block = ((20+30)* (100-15)) / (50*2) = 50*85/100 = 42%
EG2) Same as EG1, but with 20 dex
Total Block = ((20+30)* (20-15)) / (50 2) = 50*5/100 = 2%
EG3) Same as EG1, but with HShield giving 40%Block
Total Block = ((20+30+40)* (100-15)) / (50*2) = 90*85/100 = 76% = 75% (capped)
EG4) Same as EG3, but char level raised to 60
Total Block = ((20+30+40) * (100-15)) / (60*2) = 90*85/120 = 63%
EG5) 19 Dex, 20%Block shield, no gear or skills buff block
Total Block = ((20+0) * (19-15)) / (50*2) = 20*4/100 = 0%
The above is only relevant to shield-based blocking. Skills like Clawblock and Evade/Dodge/Avoid do not use this blocking formula. The % listed on those skills is the % used to block the attacks that those skills work for.