It is important to note that this method only works with blocks that can be moved by pistons, and there can still be items loss from items getting stuck and then blown up.
Blocks can not just exist outside the block grid. However pistons appear to do this all the time. Actually, the blocks to be pushed are deleted, then technical blocks - block 36 a.k.a. piston extension block - are placed at the destination, then play the animation of blocks moving(and some more stuffs) to give a sense of blocks moving.
This block 36 has some interesting properties. It has a blast resistance of 0, and can't be broken by tools, but can be broken by explosion, after that it will drop the same things the block it replaces would drop if broken by explosions, however with a 100% chance. Thus, blowing up a moving block greatly increase efficiency.