Why step up to the 2700 instead of adding a block?

Because it costs nothing in space. The 2700 is the same 8.98 by 5.45 inch case at the same 8.12 inch height as the 2200, so the shelf is unchanged and the string count is unchanged. You gain 52 watts per cell and 7 amp hours for 4.12 pounds. Adding a block to a 2200 string means finding shelf space and re-doing the string voltage, which is a bigger change than swapping sizes.

What does a 5 second discharge rating mean?

It is the peak the block will deliver briefly, and it cannot be held. CSB publishes 650 amps over 5 seconds for this size and marks it as such. Sustained discharge is governed by the watts per cell column at your required duration. Treat the 5 second number as headroom for inrush, and size the string on the 15 minute or 5 minute figure.

Does the 4.20 milliohm figure matter in practice?

On a long string, yes. Every block's resistance sits in series with the rest, so a 24 block string carries roughly 100 milliohms of internal resistance in total. Lower per-block resistance means less voltage sag under a hard step and a string that holds above its cutoff longer for the same draw. It is also the commissioning baseline your impedance testing gets compared against later.

When is the XPL3500 the better answer?

When you need more than 253 watts per cell and can give up the footprint. The 3500 moves to a 10.28 by 6.63 inch case, 16 pounds heavier, for 318 watts per cell and 85 Ah. If the shelf cannot take the larger case, the 2700 is the ceiling in this form factor and the honest answer is to say so.