Blood is formed through haematopoiesis from hematopoietic stem cells in bone marrow, which produces red blood cells, white blood cells, and platelets. The spleen and thymus play crucial roles in immune function and lymphocyte production, while lymph nodes filter lymph and support the immune response. Abnormalities in blood cell production can lead to conditions like aplastic anemia or leukemia, affecting the body's ability to produce or regulate blood cells.