How does this carry look ahead block work?
That diagram doesn't show the actual carry logic. To see how it works you have to examine that in detail.
The carry logic in a look ahead adder is built so it does not have the intrinsic delay associated with a ripple carry adder, where each carry output is input to the next partial adder stage.
In a carry look ahead adder, the carry logic is calculated at the same time, based purely on the inputs. So all the carry signals are generated at the same time, rather than waiting for the previous stages carry calculations to propagate (ripple) through. 
This requires quite a bit of extra logic, but is obviously a lot faster. It's a bit similar to how ripple counters can be improved.
The diagram on page 2 of this document shows the difference between the two carry logics, and this page has an excellent treatment of the subject also.