diff --git a/block-library/freeform/editor.scss b/block-library/freeform/editor.scss
index 81c53e7f81c211..9c03b0667461d2 100644
--- a/block-library/freeform/editor.scss
+++ b/block-library/freeform/editor.scss
@@ -146,7 +146,7 @@ div[data-type="core/freeform"] .editor-block-contextual-toolbar + div {
 
 .freeform-toolbar {
 	width: auto;
-	margin: 0 #{ -$parent-block-padding };
+	margin: 0 #{ -$block-padding };
 	position: sticky;
 	z-index: z-index(".freeform-toolbar");
 	top: $block-padding;
@@ -209,8 +209,8 @@ div[data-type="core/freeform"] .editor-block-contextual-toolbar + div {
 	.editor-block-list__block[data-type="core/freeform"] {
 		.editor-block-contextual-toolbar {
 			float: right;
-			margin-right: -$block-padding - $block-side-ui-clearance - $border-width;
-			transform: translateY(-#{ $block-padding });
+			margin-right: -$block-side-ui-clearance - $border-width;
+			transform: translateY(-#{ $block-padding - $border-width });
 			top: $block-padding;
 
 			.editor-block-toolbar {
diff --git a/edit-post/assets/stylesheets/_variables.scss b/edit-post/assets/stylesheets/_variables.scss
index 3f7675fd84bed5..b46070da687ae0 100644
--- a/edit-post/assets/stylesheets/_variables.scss
+++ b/edit-post/assets/stylesheets/_variables.scss
@@ -50,14 +50,12 @@ $inserter-tabs-height: 36px;
 $block-toolbar-height: $block-controls-height + $border-width;
 
 // Blocks
-$parent-block-padding: 28px; // padding of top level blocks, should be larger than $block-padding, otherwise a user can't select the parent from a child
 $block-padding: 14px; // padding of nested blocks
 $block-spacing: 4px; // vertical space between blocks
 
 $block-side-ui-width: 28px; // width of the side UI, matches half matches half of a single line of text, so two buttons stacke matches 1
 $block-side-ui-clearance: 2px; // space between side UI and block
 $block-side-ui-padding: $block-side-ui-width + $block-side-ui-clearance; // total space used to accommodate side UI
-$block-parent-side-ui-clearance: $parent-block-padding - $block-padding; // space between side UI and block on top level blocks
 
 $block-container-side-padding: $block-side-ui-width + $block-padding + 2 * $block-side-ui-clearance;
 
diff --git a/edit-post/assets/stylesheets/_z-index.scss b/edit-post/assets/stylesheets/_z-index.scss
index 9f44e1dcb1564e..44b6824b184860 100644
--- a/edit-post/assets/stylesheets/_z-index.scss
+++ b/edit-post/assets/stylesheets/_z-index.scss
@@ -9,7 +9,8 @@ $z-layers: (
 	".editor-block-list__block {core/image aligned left or right}": 20,
 	".editor-block-list__block {core/image aligned wide or fullwide}": 20,
 	".freeform-toolbar": 10,
-	".editor-block-list__breadcrumb": 1,
+	".editor-block-list__layout .reusable-block-indicator": 1,
+	".editor-block-list__breadcrumb": 2,
 	".components-form-toggle__input": 1,
 	".editor-inserter__tabs": 1,
 	".editor-inserter__tab.is-active": 1,
diff --git a/edit-post/components/visual-editor/style.scss b/edit-post/components/visual-editor/style.scss
index 7fb9dce4d01877..c76e233652d48f 100644
--- a/edit-post/components/visual-editor/style.scss
+++ b/edit-post/components/visual-editor/style.scss
@@ -32,12 +32,12 @@
 		// Use specific selector to not affect nested block toolbars.
 		&[data-align="wide"] > .editor-block-contextual-toolbar,
 		&[data-align="full"] > .editor-block-contextual-toolbar {
-			width: calc(100% + #{ ($parent-block-padding * 4) + $border-width + $border-width }); // Matches the negative margins applied to parent blocks.
+			width: calc(100% + #{ $block-side-ui-width * 2 + $block-padding * 2 + $border-width * 2 }); // Matches the negative margins applied to parent blocks.
 			height: 0; // This collapses the container to an invisible element without margin.
 			text-align: center;
 
 			.editor-block-toolbar {
-				max-width: $content-width + $block-padding + $block-padding;
+				max-width: $content-width;
 				width: 100%;
 				position: relative;
 			}
@@ -45,7 +45,7 @@
 
 		// The centering math changes when a fullwide image doesn't have block padding.
 		&[data-align="full"] > .editor-block-contextual-toolbar {
-			width: calc(100% + #{ ($parent-block-padding * 2) + ($block-padding * 2) }); // Matches the negative margins applied to non-parent blocks, except for borders which are gone in fullwide.
+			width: calc(100% + #{ $block-side-ui-width * 2 + $block-padding * 2 }); // Matches the negative margins applied to non-parent blocks, except for borders which are gone in fullwide.
 
 			.editor-block-toolbar {
 				max-width: $content-width - $border-width - $border-width;
@@ -80,11 +80,11 @@
 		margin-right: 0;
 	}
 
-	// Include space for side UI on desktops.
+	// Stretch to mimic outline padding on desktop.
 	@include break-small() {
 		> div {
-			margin-left: -$block-side-ui-width;
-			margin-right: -$block-side-ui-width;
+			margin-left: -$block-side-ui-clearance;
+			margin-right: -$block-side-ui-clearance;
 		}
 	}
 }
diff --git a/packages/block-library/src/block/edit-panel/style.scss b/packages/block-library/src/block/edit-panel/style.scss
index df57f3b5cbfb8f..854971aa7bddf9 100644
--- a/packages/block-library/src/block/edit-panel/style.scss
+++ b/packages/block-library/src/block/edit-panel/style.scss
@@ -8,8 +8,8 @@
 	font-size: $default-font-size;
 	position: relative;
 	top: -$block-padding;
-	margin: 0 (-$parent-block-padding) (-$block-padding) (-$parent-block-padding);
-	padding: $grid-size $parent-block-padding;
+	margin: 0 (-$block-padding) (-$block-padding) (-$block-padding);
+	padding: $grid-size $block-padding;
 
 	// Show a smaller padding when nested.
 	.editor-block-list__layout & {
diff --git a/packages/block-library/src/block/indicator/style.scss b/packages/block-library/src/block/indicator/style.scss
index ccbc57ec7c33d0..1f3937ea99cd94 100644
--- a/packages/block-library/src/block/indicator/style.scss
+++ b/packages/block-library/src/block/indicator/style.scss
@@ -7,11 +7,7 @@
 	height: 30px;
 	padding: $grid-size-small;
 	position: absolute;
+	z-index: z-index(".editor-block-list__layout .reusable-block-indicator");
 	width: 30px;
-	right: -$parent-block-padding;
-
-	// Show less offset in nested contexts.
-	.editor-block-list__layout & {
-		right: -$block-padding;
-	}
+	right: -$block-padding;
 }
diff --git a/packages/editor/src/components/block-list/style.scss b/packages/editor/src/components/block-list/style.scss
index b059f363d0f08b..929a6bdb7a1188 100644
--- a/packages/editor/src/components/block-list/style.scss
+++ b/packages/editor/src/components/block-list/style.scss
@@ -1,8 +1,7 @@
 .editor-block-list__layout .components-draggable__clone {
 	// Hide the Block UI when dragging the block
 	// This ensures the page scroll properly (no sticky elements)
-	.editor-block-contextual-toolbar,
-	.editor-block-settings-menu {
+	.editor-block-contextual-toolbar {
 		// I think important is fine here to avoid over complexing the selector
 		display: none !important;
 	}
@@ -53,7 +52,7 @@
 		padding-left: 0;
 		padding-right: 0;
 
-		// Compensate for block padding horizontally.
+		// Compensate for block padding.
 		margin-left: -$block-padding;
 		margin-right: -$block-padding;
 	}
@@ -91,10 +90,12 @@
 	/**
 	 * Notices
 	 */
+
 	.components-placeholder .components-with-notices-ui {
 		margin: -10px 20px 12px 20px;
 		width: calc(100% - 40px);
 	}
+
 	.components-with-notices-ui {
 		margin: 0 0 12px 0;
 		width: 100%;
@@ -129,20 +130,6 @@
 			left: -$block-padding;
 			top: -$block-padding;
 			bottom: -$block-padding;
-
-			// Show wider padding for top level blocks.
-			@include break-small() {
-				right: -$parent-block-padding;
-				left: -$parent-block-padding;
-			}
-		}
-
-		// Show smaller padding for child blocks.
-		.editor-block-list__block-edit::before {
-			right: -$block-padding;
-			left: -$block-padding;
-			top: -$block-padding;
-			bottom: -$block-padding;
 		}
 	}
 
@@ -243,14 +230,8 @@
 
 		top: -$block-padding;
 		bottom: -$block-padding;
-		right: -$parent-block-padding;
-		left: -$parent-block-padding;
-
-		// Position for nested blocks
-		.editor-block-list__block & {
-			right: -$block-padding;
-			left: -$block-padding;
-		}
+		right: -$block-padding;
+		left: -$block-padding;
 	}
 
 	&.has-warning.is-selected .editor-block-list__block-edit::after {
@@ -345,8 +326,7 @@
 		z-index: z-index(".editor-block-list__block {core/image aligned wide or fullwide}");
 
 		// Mover and settings above
-		> .editor-block-mover,
-		> .editor-block-settings-menu {
+		> .editor-block-mover {
 			// This moves the menu up by the height of the button + border + padding.
 			top: -$block-side-ui-width - $block-padding - $block-side-ui-clearance;
 			bottom: auto;
@@ -360,13 +340,7 @@
 			}
 		}
 
-		> .editor-block-settings-menu {
-			width: $block-side-ui-width;
-			flex-direction: row;
-		}
-
-		> .editor-block-mover .editor-block-mover__control,
-		> .editor-block-settings-menu > * {
+		> .editor-block-mover .editor-block-mover__control {
 			float: left;
 		}
 
@@ -397,16 +371,6 @@
 
 	// Wide
 	&[data-align="wide"] {
-		// Position hover label on the right
-		> .editor-block-list__breadcrumb {
-			right: -$block-padding;
-		}
-
-		// Position ellipsis.
-		> .editor-block-settings-menu {
-			right: -$block-padding + $block-side-ui-clearance;
-		}
-
 		// Position mover
 		> .editor-block-mover {
 			left: -$block-padding + $border-width;
@@ -450,11 +414,6 @@
 			border-right-width: 0;
 		}
 
-		// Position ellipsis.
-		> .editor-block-settings-menu {
-			right: $block-side-ui-clearance;
-		}
-
 		// Position mover
 		> .editor-block-mover {
 			left: $border-width;
@@ -497,7 +456,6 @@
 .editor-block-list__block {
 
 	// Left and right block settings and mover.
-	> .editor-block-settings-menu,
 	> .editor-block-mover {
 		position: absolute;
 		width: $block-side-ui-width + $block-side-ui-clearance;
@@ -507,7 +465,6 @@
 	}
 
 	// Position depending on whether selected or not.
-	> .editor-block-settings-menu,
 	> .editor-block-mover {
 		top: -$block-padding - $border-width;
 	}
@@ -517,44 +474,18 @@
 		&.is-multi-selected,
 		&.is-selected,
 		&.is-hovered {
-			.editor-block-settings-menu,
 			.editor-block-mover {
 				z-index: z-index(".editor-block-list__block.is-{selected,hovered} .editor-block-{settings-menu,mover}");
 			}
 		}
 	}
 
-	// Right side UI
-	> .editor-block-settings-menu {
-		padding-left: $block-side-ui-clearance;
-
-		// Position for top level blocks
-		right: -$block-side-ui-width - $block-side-ui-clearance - $block-parent-side-ui-clearance;
-
-		// Position for nested blocks
-		.editor-block-list__block & {
-			right: -$block-side-ui-width - $block-side-ui-clearance;
-		}
-
-		// Mobile
-		display: none;
-		@include break-small() {
-			display: flex;
-			flex-direction: column;
-		}
-	}
-
 	// Left side UI
 	> .editor-block-mover {
 		padding-right: $block-side-ui-clearance;
 
 		// Position for top level blocks
-		left: -$block-side-ui-width - $block-side-ui-clearance - $block-parent-side-ui-clearance;
-
-		// Position for nested blocks
-		.editor-block-list__block & {
-			left: -$block-side-ui-width - $block-side-ui-clearance;
-		}
+		left: -$block-side-ui-width - $block-side-ui-clearance;
 
 		// Mobile
 		display: none;
@@ -603,8 +534,7 @@
 		}
 
 		.editor-inserter__toggle,
-		.editor-block-mover__control,
-		.editor-block-settings-menu .components-button {
+		.editor-block-mover__control {
 			width: $icon-button-size;
 			height: $icon-button-size;
 			border-radius: $radius-round-rectangle;
@@ -628,11 +558,6 @@
 				float: left;
 			}
 		}
-
-		// Block Settings
-		.editor-block-settings-menu > * {
-			float: left;
-		}
 	}
 
 	// Reset negative margins on mobile for full-width.
@@ -813,14 +738,8 @@
 	margin-right: 0;
 
 	@include break-small() {
-		margin-left: -$parent-block-padding - $parent-block-padding - $border-width;
-		margin-right: -$parent-block-padding - $parent-block-padding - $border-width;
-
-		// Position toolbar for nested contexts.
-		.editor-block-list__block & {
-			margin-left: -$parent-block-padding - $block-padding - $border-width;
-			margin-right: -$parent-block-padding - $block-padding - $border-width;
-		}
+		margin-left: -$block-side-ui-width - $block-padding - $border-width;
+		margin-right: -$block-side-ui-width - $block-padding - $border-width;
 
 		// Except for wide elements, this causes a horizontal scrollbar.
 		[data-align="full"] & {
@@ -924,15 +843,6 @@
 	right: 0;
 	top: -$block-padding - $border-width;
 
-	@include break-small() {
-		right: -$block-parent-side-ui-clearance;
-	}
-
-	// Nested
-	.editor-block-list__block-edit & {
-		right: $parent-block-padding - $block-padding - $block-parent-side-ui-clearance;
-	}
-
 	.components-toolbar {
 		padding: 0;
 		border: none;
@@ -977,9 +887,9 @@
 		&::before {
 			bottom: 0;
 			content: "";
-			left: -$parent-block-padding - $block-padding;
+			left: -$block-padding * 2;
 			position: absolute;
-			right: -$parent-block-padding - $block-padding;
+			right: -$block-padding * 2;
 			top: 0;
 		}
 
@@ -1002,23 +912,15 @@
 .editor-block-list__block .editor-warning {
 	z-index: z-index(".editor-warning");
 	position: relative;
-
-	// Stretch the warning edge to edge.
-	margin-left: -$parent-block-padding - $border-width;
-	margin-right: -$parent-block-padding - $border-width;
-
-	// Stretch the warning less in nested contexts.
-	.editor-block-list__block & {
-		margin-left: -$block-padding - $border-width;
-		margin-right: -$block-padding - $border-width;
-	}
+	margin-right: -$block-padding - $border-width;
+	margin-left: -$block-padding - $border-width;
 
 	// Pull the warning upwards to the edge, and add a negative bottom margin to compensate.
 	margin-bottom: -$block-padding - $border-width;
 	transform: translateY(-$block-padding - $border-width);
 
 	// Bigger padding on mobile where blocks are edge to edge.
-	padding: 10px $parent-block-padding;
+	padding: 10px $block-padding;
 	@include break-small() {
 		padding: 10px $block-padding;
 	}
diff --git a/packages/editor/src/components/post-title/style.scss b/packages/editor/src/components/post-title/style.scss
index a2e762ac9b51ba..0c8fc2c4ca3e88 100644
--- a/packages/editor/src/components/post-title/style.scss
+++ b/packages/editor/src/components/post-title/style.scss
@@ -4,7 +4,7 @@
 	font-size: $editor-font-size;
 
 	@include break-small() {
-		padding: 5px $block-parent-side-ui-clearance;
+		padding: 5px $block-side-ui-clearance;
 	}
 
 	.editor-post-title__input {
@@ -17,14 +17,8 @@
 		line-height: $default-line-height;
 		color: $dark-gray-900;
 		transition: border 0.1s ease-out;
-
-		// Show wider parent padding on Desktop breakpoints.
 		padding: #{ $block-padding + 5px } $block-padding;
 
-		@include break-small() {
-			padding: #{ $block-padding + 5px } $parent-block-padding;
-		}
-
 		// Stack borders on mobile.
 		border: $border-width solid transparent;
 		border-left-width: 0;
@@ -86,7 +80,7 @@
 	right: 0;
 
 	@include break-small() {
-		left: $block-parent-side-ui-clearance;
-		right: $block-parent-side-ui-clearance;
+		left: $block-side-ui-clearance;
+		right: $block-side-ui-clearance;
 	}
 }