Also spelled gauge block, the gage block is a machinist instrument that provides a precise lenght reference.
In practical terms, it is a (surprisingly expensive) little bar that has been precisely measured. The material used can be steel, chromed steel, tungsten carbide, ceramic and chromium carbide. Steel is the traditional choice, probably chromium carbide is the best. Seen from the side:
side L
+-------+
face A | | face B
+-------+
This is what the gage block is all about; face A and face B are guaranteed to be flat and parallel. The side L is guaranteed to be (at 20 degrees Celsius) of a certain specified lenght.
There is a grading system defined by NIST that determines what degree of uncertainty is acceptable in the measurement.
Gage blocks are used for calibrating high precision measuring instrument like micrometers. They are also used for direct measuring and comparison with machined pieces - to obtain a given lenght a set of blocks is stacked and a phenomenon called wringing guarantees that they stick together. And what are gage blocks themselves tested against? They are tested against other, precisely known, gage blocks - the whole operation can be performed by NIST and other national certification entities. The comparison is usually done with interferometry (ultimately relying on fundamental characteristics of light), and it can be done to nanometer precision. At this level of precision subtly intriguing nightmares appear, like the tendency of certain alloys to shrink or grow over time, the fact that everything flexes, the influence of thermal radiation coming from the operator doing the measurement...
These things are fairly expensive. An individual block usually runs in the tens of dollars, but what do you do with just one block? For a complete steel set, including around 80 pieces and allowing measurements on a range from 0.1 to 12 inches, you could find yourself spending from 1000 to 3000 USD (and remember that you have to decide if you want the metric or the imperial measurements)
Web sources: http://www.mel.nist.gov/div821/pubs/9708-abs.pdf tells you something about the history of the gage block in the US, http://www.aajansson.com/gbprices.htm is a maker of gage blocks. But if you really really really want to go deep into the topic, perhaps even too much, read http://ts.nist.gov/ts/htdocs/230/233/calibrations/dimensional/pubs/MN180.pdf, the Gage Block Handbook, by Ted Doiron and John Beers, Dimensional Metrology Group, Precision Engineering Division, National Institute of Standards and Technology. You will never be the same person again.