Regarding semantics, it cannot be explained in just one sentence or two, and there is no official and very strict definition now. There is no dispute about <blockquote> :
1. Quote a longer paragraph of text
2. You can use cite tags or attributes
The question is whether the literal referenced in <blockquote> must be included with block-level elements?
First of all, the explanation from W3C
9.2.2 Quotations: The BLOCKQUOTE and Q elements<!ELEMENT BLOCKQUOTE - - (%block;|SCRIPT) -- long quotation --><!ATTLIST BLOCKQUOTE %attrs;
-- %coreattrs, %i18n, %events -- cite
%URI;
#IMPLIED -- URI for source document or msg -- ><!ELEMENT Q - - (%inline;)*
-- short inline quotation --><!ATTLIST Q %attrs;
-- %coreattrs, %i18n, %events -- cite
%URI;
#IMPLIED -- URI for source document or msg -->
The two notes include cited texts. BLOCKQUOTE is used for long text quotations (block-level content) and Q is used for short text quotations (inline content) and sentences that are not allowed to be cited are incomplete.
The text for this example comes from The Two Towers, author JRR Tolkien, the most cited text.
<BLOCKQUOTE cite=http://www.mycom.com/tolkien/twotowers.html><P>They went in single file, running like hounds on a strong scent,and an eager light was in their eyes. Nearly due west the broad swat of the marching Orcs tramped its ugly slot; the sweet grass of Rohan had been bruised and blackened as they passed.</P></BLOCKQUOTE>
This article is developed using web standards. It mentions some semantics of TAGS. The following excerpt is <blockquote>
For longer quotations that form one or more paragraphs, the <blockquote> element should be used. CSS can then be used to style the quotation. Note that text is not allowed directly inside a <blockquote> element – it must be contained in an element, usually a <p> element.
Example:<blockquote cite=http://www.w3.org/TR/1999/REC-html401-19991224/struct/text.html> <p>“The following sections discuss issues surrounding the structuring of text. Elements that present text (alignment elements, font elements, style sheets, etc.) are discussed elsewhere in the specification. For information about characters, please consult the section on the document character set.”</p></blockquote>
http://24ways.org/advent/transitional-vs-strict-markup
This article is about the difference between transitional-vs-strict, transitional and standard xhtml. It mentions the difference between content model and has something about <blockquote>. In strict, the referenced content must be included with block-level elements, usually in <p>, <div>.
Content model differences
An element type 's content model describes what may be contained by an instance of the element type. The most important difference in content models between Transitional and Strict is that blockquote, body, and form elements may only contain block level elements. A few examples:
text and images are not allowed immediately inside the body element, and need to be contained in a block level element like p or div
input elements must not be direct descendants of a form element
text in blockquote elements must be wrapped in a block level element like p or div
So, I think that in strict type, you must include reference literals with block-level elements, but it is not necessary in non-strict types, but it is recommended to do this because strict type documentation is more stringent and is also considered backward compatible.