Is "Pick up those blocks" grammatically incorrect?

The English demonstratives—this, that, these, and those—can all be used as either adjectives (“Those blocks are square”) or pronouns (“Those are square”).

Also, how would you distinguish “those blocks” from “those dolls” if you could only say “those”?

"Pick up those blocks" is perfectly correct. The fact that "those" is plural doesn't mean that you can leave out the object, "blocks." How would the child know what to pick up?

There's something off about the sentence "Pick up those," because the antecedent of "those" is missing.

"Should I pick up these or those?"
"Pick up those."

is OK. But by itself, it sounds wrong.