Another Actor is named Actor2, which has only one StaticMeshComponent. Its collision presets property is also BlockAll, and its Tick event will call SetRelativeScale3D to change the size.
There’s nothing wrong with the setup. You’re just expecting the wrong thing. What did you expect the engine to do, actually?
prevent you from scaling the blue block up?
scale the blue block in one direction only?
push the white block away?
push the blue block away?
all of the above?
Any and all of the above behaviours are for you to script, not for the engine to guess. The engine will not stop you from forcing geometry intersections, it will instead do what you tell it to until it crashes & burns If you wanted some automated interactivity, you’d need physics or movement components, or look into what Sweeps are.
Enable physics simulation on both entities and you’ll see a physically accurate (almost) response.