CONFIG_FEATURE_TFTP_BLOCKSIZE=y
That feature is enabled. I use a blocksize of 64000 in my own use. Perhaps we have a busybox vs older implementation difference here, in busybox the client specifies the block size, not server.
edit: There's at least one other tftpd server in the repo, in inetutils-servers, if your clients can't use the busybox tftp client.