Block Builder
A specialized party that assembles the contents of a block and sells it to the validator whose turn it is to propose.
Proposer-builder separation splits two jobs that used to belong to one participant: deciding what goes in a block, and signing it as the network's chosen proposer. On Ethereum this is implemented outside the protocol through MEV-Boost, where builders compete by bidding for the right to have their block used, relays pass the winning header to the proposer, and the proposer signs it without seeing the contents until it is committed. The arrangement lets a small home validator capture ordering value it could never find itself, at the cost of relying on relays and on a builder market that has tended to concentrate among a few firms, which raises censorship-resistance concerns. Building the separation into the protocol itself is an active area of research.
In practice
A validator running MEV-Boost signs the highest-bidding header supplied by a relay, and receives the bid amount whether or not it could have constructed a comparable block alone.
The common misunderstanding
Outsourcing block building is not outsourcing validation; the proposer still signs the block and remains responsible, including for slashing.