How do the holiday feeding blocks work?

The holiday feeding blocks consist of a plaster-like (calcium-based) block in which food pellets are embedded. The base plaster material softens in water. The fish can smell that there are food pellets in the block, and will nibble at the softened material until they expose a pellet. If they are still hungry, they will continue to nibble until they expose another, and so on. 

I have just returned from holiday and the fish did not eat the holiday block. Why is this, and have they been harmed by having no food?

It is sometimes the case that well-fed fish are not interested in the food in the holiday block and do not really eat it, but going without food for this period will not harm them. 

Can the holiday food block pollute my aquarium water if it’s not eaten?

No, the holiday block will not pollute the water. The protein component of the food pellets is based on plant proteins. The pellets are also designed to emerge and be consumed/decomposed at a rate that makes it impossible for the block to elevate ammonia levels or pollute water.