I suppose when muted, posts from lemmy.ml would not appear in my feed. Same thing when blocked. The only difference will be the visibility of lemmy.ml itself, its posts, and communities. If muted, I could still access them, and when blocked, they would not exist for me. Am I right?

Yes!

What about comments and private messages? From my experience, when muted, they are still visible , but when blocked, what happens?

I can only explain the behavior of muting because is the one I developed for Boost. Muting only affects posts in a feed. If you mute an user, you won’t see posts from that user in your feed. It doesn’t affect comments or messages.