It's like a universal symbol for 'I wont be a scumbag'.
That pretty much nails it. I upblock when I:
1. greet some people
2. ask for duel / accept a duel offering
3. want to show that I´m not going to attack somebody (f.e. when somebody from the enemy team is just trying to build a siege tower on a map or other shenanigans)
1 and 3 was usually followed by sheathing the weapon, a short hug and a friendly slap afterwards
EDIT: Paul is right, that was f.e. also a common sign for wanting a duel on native Nditions duel server