Multiple people can play online with only one key, as long as they are at the same IP address. So you can definitely have multiple people playing from your house with only one copy of the game. You will all have the same name because you're using the same account, but you can use the clan tag system to differentiate each other.
In a LAN party scenario, you only need one unlocked copy of the game (you don't want to give your key to strangers). You host a LAN game with your unlocked copy of Blockland, and everyone else will be able to join in using the demo version of Blockland.
