If you create a group composed of objects on the same layer of the drawing, the group will reside on that layer. For objects on different layers, the group will be on Layer 0. If you subsequently explode the group, its constituent objects will return to its original layer.
Objects should be moved to Layer 0 before being used to create a block. The block itself, when inserted in the drawing, can be reassigned to the proper layer. Any objects within the block that have a By Layer property will take on the assigned layers attributes.
When a block is exploded, all objects originally assigned to Layer 0 will stay on the layer the block was on. Any objects with other layer assignments will retain those layers.