STEPS TO REPRODUCE
1. Insert multiple lines of text without spaces.
2. Enter block mode.
3. Select a line down the middle.
4. Press Tab.

OBSERVED RESULT
The whole block of text indents despite the setting
"Editing" -> "Indentation" -> "Increase indentation level if in leading blank space"
being active. Block mode somehow seems to make kate believe that either the cursor is in a leading position or that it is next to blank space.

EXPECTED RESULT
When in block mode, All of the lines should be split with a tab character at the current cursor position, as long as the first or third option is active ("Always increase indentation level"  should obviously always indent).

SOFTWARE/OS VERSIONS

Linux/KDE Plasma: Kernel 6.4.0-150600.23.22-default (64-bit)
KDE Plasma Version: 5.27.11
KDE Frameworks Version: 5.115.0
Qt Version: 5.15.12

ADDITIONAL INFORMATION