Queuing towards a red light, you pass a rectangular yellow sign reading DO NOT BLOCK INTERSECTION at a small side street with no traffic lights of its own. What is it asking of you?

Correct answer: C. Stop short of the side street and leave a gap, so traffic can enter and leave it while you wait for the light ahead

Leave a gap across the side street even though the queue is stationary. Book 6 says the sign's purpose "is to warn queuing drivers to leave a gap in the queue at an intersection, so vehicles can enter and leave the cross street", and describes exactly the situation you are in: it "is typically used in urban settings, for example, where an unsignalized intersection immediately upstream of a signalized intersection tends to be blocked by traffic queuing for a red signal." Two limits are worth knowing. It is for intersections, not private access — the sign "should not be used to refer to driveways and unsignalized commercial entrances." And it is rectangular rather than diamond-shaped "to better accommodate the text message", which is why it does not look like the warning signs around it.

Source: MTO Driver's Handbook: Ontario Traffic Manual, Book 6 — Warning Signs (July 2001), Section 3 — DO NOT BLOCK INTERSECTION Sign (Wa-73)