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When you block the sign-in of a user in your Microsoft 365 admin center, the Waldo license is automatically unassigned.
When you block the sign-in of a user in your Microsoft 365 admin center, as below:
The Waldo license will be automatically unassigned in the Waldo administration portal and the user won't be visible anymore in the Licenses list.
It may take 24 hours from the time you make a change in your Microsoft 365 admin center until it appears in the Waldo administration portal. But you can always force the refresh of the user list, as described here: https://customer.hellowaldo.app/en/support/solutions/articles/8000098845-can-t-see-new-users-or-new-groups-in-the-user-list