I notice that blocks are being downloaded while my Bitcoin core wallet is syncing in the form of .dat file which is the same format as my wallet on Electrum. Can anyone explain to me in ELI5 what is this format and how block files differ from my wallet files while they have the same format?
The file extension doesn't matter much, it could be .txt or anything else. What matters is the data stored on those files.
blk.dat files contain data related to the blocks and transactions that have been mined while
wallet.dat contains data related to your wallet.
If I have the record of all the block files, why is the syncing process still manually reading all my current blocks which is the same speed as when I downloaded them manually? I did an experiment about this in which I saved all my downloaded blocks and uninstalled my Bitcoin core then I manually put the block file in the directory folder when I reinstalled the new app.
The blockchain, as the name suggests, is a
chain of block where each block is connected to the previous one. To verify the validity of the blocks and transactions you have downloaded, your node needs to verify the validity of each of them going back to the genesis block (first block ever mined).
Is it possible to skip certain blocks like blocks around 2009 to 2012
I believe not for the reason explained above.
Lastly, What I'm achieving in running a node? Am I helping the blockchain to become more decentralized?
Yes, by running a full node you contribute to the decentralization of the network and by using bitcoin core as your wallet or connecting your wallet to your own full node you improve your anonymity.