Function declaration in block moving temporary value outside of block?

The following happens:

(1) There exist two variable declarations a, one inside the block and one outside of it.

(2) The function declaration gets hoisted, and bound to the inner blocks variable.

(3) a = 5 is reached, which overrides the block variable.

(4) the function declaration is reached, and the block variable is copied to the outer variable. Both are 5 now.

(5) a = 0 is reached, which overrides the block variable. The outer variable is not affected by this.

 var a¹;
 if (true) {
   function a²() {} // hoisted
   a² = 5;
   a¹ = a²; // at the location of the declaration, the variable leaves the block      
   a² = 0;
  console.log(a²)
}
console.log(a¹);

This is actually not really part of the specification, it is part of the web legacy compatibility semantics, so don't rely on this code to behave in this way and always "use strict"; mode.

This is also explained here.