After removing it, emails from that address should now reach your Inbox (or Junk folder if still flagged, so check your Junk folder too). To be safe, you can also add the address to in the same Junk email settings section.
The email address is now unblocked. Future emails from this sender should arrive in your Inbox. If you have previously deleted their emails, they will not reappear; you will only receive new emails moving forward.
By following these detailed steps, you should be able to restore communication with any previously blocked contacts in your Hotmail/Outlook account.
Once you have successfully unblocked an email address, it is wise to ensure future emails land in your main inbox rather than the Junk folder.
Find an old email from that sender (usually in your folder).