From the Super Mario Wiki
Squishy blocks are movable platforms which appear in Super Mario World 2: Yoshi's Island and Yoshi's Island: Super Mario Advance 3. They are pinkish-orange blocks that move when pushed. When pushed against a wall, they squish against it, growing taller and thinner. When Ground Pounded, the inverse happens. This is an easy way to transport items over spikes. They are very rare, and only appear in three levels. In the Game Boy Advance remake, there is a translucent squishy block in Endless World of Yoshis, bringing the total to four.