DEVICE 81,0 does not refer to blocks at all: together with TYPE CHR it indicates this device is a character device with major number 81 and minor number 0.
From /proc/devices, you can see that character device major number 81 is associated with the video4linux subsystem. The minor numbers are assigned by each subsystem as they see fit: in this case, the minor number is directly reflected in the device name /dev/video0 generated by udev.
Classically, unix-like systems used the machine-friendly device numbers as the primary internal identifiers for devices, rather than human-friendly device names. The entire /dev directory tree with its device nodes is basically a big look-up table that allows the kernel's filesystem drivers to convert device names to device numbers, much like the /etc/services file allows you to use a port name like ssh or ntp instead of port numbers like 22 or 123, respectively. Device nodes can also have permissions, which is also very useful for restricting inappropriate access to device drivers.
When you run lsof as a regular user, it may output information about your own processes only: a regular user has no business snooping on other users. Root privileges are required to see what other users' processes are doing.