The blockade was happening because Palpatine and Plagueis arranged it. The trade federation said they wanted a better trade deal, but were really there to avoid being killed by the sith (motivation) and to militarily take over the planet (goal given to them by the sith). They likely also had an expectation that they'd get a better deal, which might have been better prices, reduced tarrifs, setting their own tarrifs, exclusivity/monopoly, or anything that could be used to increase their wealth. The specifics weren't important to the overall plot, main point was that they were attempting to ecnomically dominate Naboo at first and then were financially backing one side of the clone wars and their main motivation was because the sith would kill them if they didn't (which was their fate in the end even though they did because they were always just tools).

The planet was picked because it was Palpatine's home planet and he was the senator; it was a false flag attack intended to garnish sympathy that he would leverage for more political power.