The blocking does two things...it give you an edge to hold the 'mud' and it gives you a place to tack the liner up the wall.
The best place to research building a shower is www.johnbridge.com. There are other ways to do this, and the one I like is to use Kerdi. This makes the entire shower - walls, floor, etc., all waterproof right under the tile. Check out www.schluter.com and view their videos on Kerdi shower construction. You wouldn't need the blocking, can use drywall on the walls instead of cement board, and will end up with a better shower. The conventional one works fine, too.