To bless is to offer a holy seal of approval, like when a priest blesses water, making holy water. It’s also what people say when you sneeze: bless you, which is short for “may God bless you.”
If you go back far enough, the word bless is related to the word blood, because of the blood sprinkled on pagan alters. It moved on to mean “to praise,” and now it’s a little of both (minus the pagans). In religious contexts, things are made holy when they're blessed. Also, people are blessed by good things that happen. People often say things like "I've been blessed with good health.” That means they were lucky to receive such good things.