From your inventory, your home appears to be 25 to 30 years of age. It is a single story woodframe vinyl clad structure. You made no mention of moisture in the basement, nor did you mention whether the blocks in question are near the top or bottom of the wall, or randomly distributed. Sometimes, as moisture migrates through a wall, it evaporates, and minerals which were dissolved in the water, crystallize. Whenthey crystallize on the surface, white salty deposits which sometimes look like mold, are deposited. If the crystallization happens within the blocks, the mechanical strength of the crystals forming can shatter the blocks. The amount of deterioration (particularly the thickness of the pieces falling off) concerns me. A concrete block wall is hollow, consequently there is not that much material in a concrete block. When you lose a substantial amount of it, you can compromise the structural integrity of the wall. If my theory is correct, you will want to decrease the amount of moisture in the soil, to reduce the moisture migration through the wall. See the links below for more information. But considering the severity of the flaking, my advice would be to consult with a local structural specialist or engineer.