Summary
While in Block Stun, activate an X-Factor to cancel out all remaining Block Stun that you were supposed to incur.
The Ultimate Counter
Yes, that is right: during Block Stun, you can activate X-Factor so long as you are on the ground and end all Block Stun you are currently in. This makes X-Factor activation VERY potent and allows you to counter all sorts of things. For example, with Thor, you can block you opponent's rushdown Chain Combo and, mid blocking, activate X-Factor and catch them with your Mighty Hurricane Command Throw which allows you to follow up with a combo that will have the damage boost from X-Factor! Other characters like Iron Man can block an entire Hyper Combo, perform an X-Factor Counter in the middle of blocking, and go straight into his Level 3 Iron Avenger Hyper Combo which has a ton of invincibility to beat out the Hyper Combo he was previously blocking. This makes attacking at any point in time very dangerous, so you'll have to be aware if your opponent likes to use X-Factor Counters to punish your attacks. Fortunately, thanks to the limitation of X-Factor, this can only be done once per game.
Saving Yourself
One of the best uses of this is also to save yourself at the last second from Chip Damage. If Storm, for example, activates Hail Storm and you start blocking it and know you will die from Chip Damage, you can activate X-Factor in the middle of blocking Hail Storm and stop taking Chip Damage. Then, you can try and tag your character out and regain health as an Assist. It's basically a last ditch effort to save your character from death.