This is a "new" type of Nanroid backup that seems to be the default on newer versions of CWM. Essentially, the BLOBS folder is supposed to be "shared" files common to each individual backup created. So while the BLOBS folder may be quite large, the actual size of individual backups is much smaller. The actual "Backups" folder is just incremental data.
FWIW, on the S3 using CWM, you can still create the old kind of backups (where each one is a full backup independant on the BLOBS folder), by going to:
Backup and restore --> Choose backup format --> tar
The default, "dup" is the newer format that creates the BLOBS folder
Anyone feel free to jump in correct me on this, but this is what I've found just by playing around with it. I'd rather take tar backups because I like being able to transfer them to PC and don't want to worry about the status of a shared BLOBS folder.
It is 100% safe to delete the Blobs folder (it won't break CWM or anything like that), however just know that by doing so you won't be able to restore any previous backups that are dependent on it. The first time you make a new backup (unless you use the "tar" format describe above), it will simply re-create the blobs folder.