Creatures with flying can block only creatures with flying.
Creatures without flying have reach. (They can block creatures with flying.)
This has the supertype world. When a world permanent enters, any world permanents that were already on the battlefield are put into their owners' graveyards. This is a state-based action called the "world rule." The new world permanent stays on the battlefield. If two world permanents enter at the same time, they're both put into their owners' graveyards.