Themes commonly style the top-level content elements, like .entry-content > *, for layout and spacing, eg to allow various alignments. Example:

.entry-content > :not(.alignwide):not(.alignfull):not(.alignleft):not(.alignright):not(.is-style-wide) {
  max-width: 58rem;
  width: calc(100% - 4rem);
	}
.entry-content > * {
  margin-left: auto;
  margin-right: auto;
  margin-bottom: 1.25em;
}

This doesn't really work with display: contents on the <wp-block> wrapper:

Current	Expected

One option is inheriting these spacing styles that would apply to the wrapper:

wp-block > * {
	margin: inherit;
	max-width: inherit;
	width: inherit;
}

I'm not sure that's enough for every theme, this would need wider testing and some strategy to keep compatibility with existing theme and possibly plugin styles.