Unlike "press down to pass through" blocks, this one requires the player to hold down and tap A to fall through. This is useful if you want the player to have freedom to duck and duck-jump without having to fall through.
However, if the player is riding yoshi, it requires only to tap down to fall through (to crouch on this block without falling through, jump up, then keep holding down while in midair, and you land on the block while crouching).
The block locks you to an absolute grid when you try to drop through it, as well as freezing your lateral speed. The other drop ledge block available does not have these problems or the problems that these effects ostensibly solve. My attempts to fix the block caused the game to lock up. I suppose it works as described, but it's not very good.
EDIT: I managed to defuse the gridding by commenting out the line 'STA $94', the second from last line. I was able to clip myself 8 pixels into an adjacent block for a frame having done this. I don't get it.
EDIT2: The line labeled 'halt horizontal speed' can be commented out simply without side effects. I remain appalled that I had to fix this block myself.