It seems that when there are more than 200 blocks in a Content Assets folder they lose their alphabetical sorting in the Blocks gadget.
This was first discovered by our editors when trying to add Contact Blocks. These were all in same Content Asset folder. With more than 200 blocks and no sorting they were having a tough time finding the right block.
I have since reproduced it on Alloy demo site (EPiServer.CMS.Core 11.15.1, EPiServer.CMS.UI.Core 11.25.0).
By mutliplying the blocks under the Events Assets folder so that they reached 256 blocks the alphabetical sorting stops working.The underlying cause seems to be that they stop being delivered in order from the contentstructure store. (http://localhost:64563/EPiServer/cms/Stores/contentstructure/?references=69&query=getpagedchildren&allLanguages=true&typeIdentifiers=episerver.core.blockdata&sort(+name)&dojo.preventCache=1624452789883)
It also seems to be related to the Range header in the request, since reproducing the request in Postman and then stripping the Range header results in a response with items in correct order.
This seem to be an issue in CMS 12 as well.
Can confirm. I just ran into this today and found this thread.
It appears that the blocks lose their alphabetical sorting due to the delivery order from the contentstructure store. Removing the Range header from the request may help maintain the correct order.