Blood is the densest of the vital substances, flowing through the vessels to moisten and nourish the Yin Yang organs, the tendons and muscles, the skin, and the sensory organs. Blood is the mother of Qi, and houses the Shen (Mind).In the classic texts there are three functions of blood:

Blood nourishes the body

Blood aids in the shen

Blood moistens the body

Clinical application of blood is in its relation to Qi as mentioned above.  Any time Qi flow is impaired (stagnation), blood can be sure to follow.  For example, if Kidney Qi is deficient it commonly leads to low back pain.  If present a significant time, blood will start to stagnate as well.  This will lead to the characteristic sharp, stabbing pain of blood stagnation. 

Food Qi produced by the Spleen is sent upward to Lungs, and Lungs push it to the Heart, where it is transformed into Blood. The transformation requires the assistance of the Original Qi stored in the Kidneys.  Kidney Essence produces Marrow: this generates the bone marrow, which contributes to making Blood.  Therefore: Blood is formed from the interaction of the Postnatal Jing (source of Food Qi, refined from Food by Spleen and Stomach) and the Prenatal Jing (stored in Kidneys). Chinese theory of blood forming function of the bone marrow predated the arrival of Western Medicine.