Create a Drupal block programmatically. This will create a block with an image and a tagline, demonstrating the use of theme function and render arrays

drupal_image_with_caption_block.php

<?php

// HOW TO USE:
//   Create a MY_MODULE.info file. See https://www.drupal.org/node/542202.
//   Create a MY_MODULE.module file.
//   Put the codes below in MY_MODULE.module file

// THE BIG PICTURE:
// For a block to work in Drupal, you have to do a minimum of 3 things:
// 1. Declare the block in hook_block_info().
// 2. Enable the declared block in admin/structure/block.
// 3. Create a hook_block_view() so that Drupal will know how to display the block
//    when Drupal encounters it during a page load.

/**
* Implements hook_block_info().
* 
* Registers your block to Drupal.
*/
function MY_MODULE_block_info() {
  $blocks = array();
  
  // Make sure to enable this block after enabling the module.
  $blocks['my_custom_block'] = array(
    'info' => t('My block name in admin/structure/block page.'),
  );
  
  return $blocks;
}


/**
* Implements hook_block_view().
* 
* Tells Drupal what to do when viewing the block.
*/
function MY_MODULE_block_view($delta = '') {
  $block = array();

  // $delta contains the IDs of the blocks declared inside 
  // of this MY_MODULE file.
  // If you haven't declared other block here,
  // it will always be equal to 'my_custom_block'.
  switch ($delta) {
    // Check if this is your target block.
    case 'my_custom_block':
      // Put a title/label if you want.
      $block['subject'] = 'My Custom Block Title';
      
      // Create a helper function for declring the contents of this block.
      $block['content'] = _my_custom_block_content();
      
      break;
  }

  return $block;
}


/**
* Helper function for better code maintainability.
*/
function _my_custom_block_content() {
  // Get the URL to Drupal's default Druplicon image.
  $logo_path = file_create_url('misc/druplicon.png');

  // Set the image properties.
  $image_variables = array(
    'path' => $logo_path,
    'title' => 'My Custom Logo',
    'alt' => 'My Custom Logo',
    'width' => '80%',
    'height' => '80%',
    'attributes' => array('class' => 'my-custom-logo'),
  );

  // Use the defualt theme function for image.
  // This will return a string HTML for image, given the properties.
  $output = theme('image', $image_variables);

  // Add a simple markup for image's caption/tagline.
  $output .= '<div><p>' . t('Drupal The Kraken!') . '</p></div>';

  // Comment out the codes below if you want to use Drupal's Render API.
  // Render array is a bit longer but it is the recommended approach 
  // since it allows alteration in other hooks.
  //
  /*
  $output = array();
  
  // Render Array for the Image.
  $output['image_variables'] = array(
    '#theme' => 'image',
    '#path' => $logo_path,
    '#attributes' => array(
      'title' => 'My Custom Logo',
      'alt' => 'My Custom Logo',
      'width' => '80%',
      'height' => '80%',
      'class' => 'my-custom-logo',
    ),
  );

  // Render Array for the text markup.
  // #prefix and suffix will enclose the contents of #markup.
  $output['tagline_variables'] = array(
    '#markup' => t('Drupal The Kraken!'),
    '#prefix' => '<div><p>',
    '#suffix' => '</p></div>',
  );
  */
  
  return $output;
}