Abilities that trigger when a creature blocks or becomes blocked will do so in the declaration of blockers step. These abilities will go on the stack and resolve in that step and before the combat damage step. With something like Wooden Stake this means that if a Vampire is blocked or blocked by a creature equipped with the Stake, the Vampire will be destroyed before the combat damage step.

For example, if an attacking Night Revelers is blocked by a Selfless Cathar equipped by with Wooden Stake, the Stake’s ability will trigger when blockers are declared. This ability will go on the stack and resolves, destroying the Revelers before any combat damage is dealt. In other words, the Selfless Cathar will survive.