Basically the display:block and the width made it so that:
1) The entire block of the image would be a link (instead of where the text normally would be)
2) The text (when the text-indent is applied), won't cause the entire anchor to disappear off into the horizon (that is solved by the display:block)
3) Moving the text-indent from the <li> to the <a> is needed because (if I remember right, it's been a few hours) otherwise, the text wouldn't disappear.