I use my health bar as a gauge as to whether I should be blocking normal attacks or not. When it's nearly full, I usually only block heavy attacks and I use aoe abilities to get as much attention from the mobs as possible. When my health starts dropping too fast or if it drops below say 2/3, I know I should start blocking more for even the normal attacks.
I also usually block when I first pull a group of mobs. I'll throw an aoe into the group of mobs and throw up my shield for that first incoming barrage of attacks, lol.
As for bosses, some bosses require a lot more blocking than others. It's really a case by case basis.
As a Templar healer, tanks definitely need to block more. I can't tell you how many dungeons I've run where I'm doing nothing but spamming heals to the point of magicka exhaustion because tanks just don't block or dodge. I know people aren't used to having to manually mitigate damage since most MMOs use stats as the sole means of damage mitigation but come on. Tanks need to start being more active defensively and not just stand their swinging their weapons while getting punched hard in the face.