How is Nostr resistant from state attack? An ISP can block or ban relays - no?

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Nostr is not resistant to state attack, the state is not the adversary in the security model. A case in point will be watching what happens in China if Nostr becomes popular there.

VPN can hide the traffic from ISP.

Theoretically they can block or ban anything. Ways around them though 😜

If ISPs start blocking relays, what is the work around?

Tor, i2p, and stated in other comments VPN to name a few

How powerful is your adversary? Haha. Im using iris.to via tor rn and can get around