Oyster mushrooms and how they grow

Is there any reason why I couldn't dump a whole mycelium block onto a rack when fruiting oysters, as opposed to fruiting the block in a bag/bucket with holes in it? Will this result in lots of smaller mushrooms distributed around the block, as opposed to several large fruiting bodies growing out of the "assigned" holes.

Keeping the mycelium in the bag/bucket protects it a bit if the humidity is below ideal.

If you got your humidity levels dialed in, I would advice you to experiment and do a trial to figure out how your strain reacts to the different conditions.
Changing such variables can have very different results on different strains.

Also with the buckets and bags you could get longer stems because of a possible higher CO2 concentration inside of the container.
As for the humidity,  CO2 can also be controlled for the whole room.

I don't think you will get smaller mushrooms as I get a lot of pins but not every hole produces a dominant cluster. So with a free block I predict you still get the dominant clusters.
The next variable could be volume/surface ratio. If it is adversarial to free small blocks it could be necessary for big blocks.

The bags are used for containment and prevention of contamination by air borne spores of other fungi.

Bags are also hang-able so you can grow more mushrooms in a smaller space by stacking the bags on cordage thus having the ability to as much a quadruple the amount of mushrooms per square foot of floor space.

And as Dominik brought up they help keep the mycelium moist enough to grow and thrive and thus fruit several times once the substrate is fully occupied.

Also by keeping the strain in bags it is easier to use the spent bag to inoculate new bags or logs or chip heaps and thus get even more mushrooms from your initial purchase.

Redhawk

Exposing the entire colonized mushroom block surface will allow the block to dry very rapidly, which isn't good for oysters in particular. Keeping the bag on allows a protective layer of humidity right where primordia should be forming. Even at a high humidity, air moving through a fruiting chamber can have a drying effect (especially if dry air is vented in and then humidified after entering). Also, if you do expose a large surface area, oyster blocks can grow a lot of tiny, long mushrooms in the shape of a wig or beard, as opposed to just a few nice clusters.