Why is CSS called render-blocking?

The browser does not want to show unstyled content, so it waits. It won't render until it has downloaded the CSS that applies and parsed it into the CSSOM (CSS Object Model: the tree of style rules).

"The HTML parser stops building the DOM" is the tempting wrong answer. HTML parsing keeps going while CSS downloads. "JavaScript cannot be downloaded" and "stylesheets download one after another" are also wrong. Other resources, including other stylesheets, still download in parallel.