There's a thread or two on this already.
Block rating has no diminishing returns.
There is a base 5% miss + racials (night elf) + talents (dk's frigid dreadplate) + miss% added from defense rating which contributes to your avoidance. (someone straighten me out if I got those figures a little wrong.)
Parry and dodge diminishing returns doesn't mean that if you parry a lot or dodge a lot, subsequent chances to parry or dodge are reduced. This is a common misconception. What is meant is that each point of parry or dodge rating is worth less than the previous one; it adds less to your parry or dodge %. Because parry maxes out at a much lower percentage, that means stacking parry rating gets you less bang for your buck than adding dodge rating. The benefit gained, point for point, diminishes faster for parry than dodge.
Note: talents that add to parry or dodge % are not affected by diminishing returns. This is because they don't add dodge or parry rating, they just directly add to the % chance.