Writer's block means that you can't either write or create a story, it does somewhat depends on your mood or in the state that you're in. and yes it does affect your stories, it can also be one of the reason why the story can be put into a hiatus.

It's like, if you have writer's block, it means you don't have the mood to write stories and when you do, you think it's really really bad. In conclusion you just don't have the mood to write well.