The noun blockbuster (also block-buster, block buster) denotes:
– (literally) an aerial bomb carrying a very large explosive charge, sufficient to destroy a whole block of buildings;
– (figuratively) a thing of enormous impact, power or size, especially a film, book or other product which has been conceived on an epic or grandiose scale or which achieves great commercial success.
—Cf. also, derived from blockbuster, the nouns bonkbuster and flopbuster.

The earliest literal use of blockbuster that I have found is from Synthetic Era Taking Shape Today, published in The Rich County Reaper (Randolph, Utah, USA) of Thursday 8^th January 1942:

Chemurgy, the science of finding new industrial uses for farm products, has been very busy during the past years. Now that the war is on, the good it is doing can be noted in the extensive use made of casein obtained from skimmed milk. The plastic material obtained offers the best possibilities as a substitute material in various kinds of war material.
Parts of many bombers, dropping block busters over Italy and Germany, are made from casein.

However, I have found an isolated early occurrence of the noun block buster in the following advertisement, published in The El Paso Times (El Paso, Texas, USA) of Wednesday 18^th September 1940—the reason the garment in question was called block buster is obscure:

“Popular Pets”
gayest young fashions yet
Introducing
“BLOCK BUSTER”
$16⁹⁵

“Popular Pets” for the popular maid,
They’re designed to make you so.

Frocks so cute, they’re not afraid,
To keep you smartly on the go.

Whether you’re a gay young miss,
Or her little ’teen age sis.
They’re tops in style prizes
For those who want 9 to 15 sizes

Meet a favorite called “Block Buster”
With all the charm any frock could muster.
Soft grey wool, checked with white,
Silver buttons, grey belt, both plenty brite.

Young El Pasoan Shop—Fourth Floor
Popular Dry Goods Co
EL PASO

The earliest figurative uses of blockbuster that I have found are as follows, in chronological order:

1-: From the table of contents for the November 1942 issue of Nation’s Business (Washington, District of Columbia, USA), published by the Chamber of Commerce of the United States:

Management’s Show Window
LOUIS HANCOCK RENN
The annual report can be a block-buster, frequently is a dud.

2-: From the column Examining The Record, by Jack Stinnett, published in the Stamford Advocate (Stamford, Connecticut, USA) of Tuesday 8^th December 1942—the following is about the U.S. Secretary of the Interior, Harold Ickes (1874-1952):

It is certain that no man in the Administration set-up has played trial balloon so often as Ickes. Every time there was a tough assignment on hand, the verbal block-buster was called in. Invariably, he hurled his elephant hide into the thick of things and trumpeted his loudest. More often than not, with no glory whatever to himself.

3-: From the following advertisement, published in The Film Daily (New York City, New York, USA) of Wednesday 12^th May 1943—here, blockbuster is part of an extended metaphor relating to the notion of explosion:

Watch for the box-office EXPLOSION of RKO Radio’s
“BOMBARDIER”
the block-buster of all
ACTION-THRILL-SERVICE SHOWS!
THUNDEROUS THOUSAND-PLANE WORLD PREMIERE IN 50 SOUTH-WESTERN CITIES BEGINNING MAY 16!

Sponsored by the TEXAS QUALITY NETWORK . . . a blanket barrage of radio coverage in a round-the-clock bombardment of sensational “spot” and “show” promotions . . . A gigantic showmanship push spearheaded by the spectacular events at Albuquerque, N. M., and for the Army Air Forces at nearby Kirt land Field, N. M., where much of the picture was filmed!
THE SCREEN’S GREAT DRAMA OF SOLDIERS WITH WINGS!
. . . told in a blasting bomb-run of romance and thrills . . . in the story of a lovely girl—and of three fliers who knew how to make a direct hit on a woman’s heart! . . . The mighty picture that shows the making of the boys now making it hot for the Axis!