Creatures with power less than Aura Gnarlid's power can't block it.
Aura Gnarlid gets +1/+1 for each Aura on the battlefield.
Aura Gnarlid's second ability counts each Aura regardless of who controls it.
The power of each potential blocking creature is checked against Aura Gnarlid's power only as blockers are declared. Once a creature blocks Aura Gnarlid, increasing the Gnarlid's power or decreasing the blocking creature's power won't undo that block.