The block size is the size of all the data in the block in kilobytes, including the block's header as well as all transactions.
The block size is determined by its contents. More transactions equals a larger block size. The miner that proposes the block can decide how much transactions to put in the block and therefore decide on it's size.
However, miner's are discouraged to propose a block with a size greater than the block size limit, a parameter that changes dinamically with the amount of transactions in previous blocks. The block size limit is designed to prevent spammers from flooding the blockchain, but still allow the blockchain to be scalable when a large number of legitimate transactions are made.
When a miner proposes a block larger than the current block size limit, a percentage of his block reward is deducted. The larger the block proposed, the larger the amount of ETN deducted.