Why do you put a knight or pawn in front of a fianchetto bishop? I've been asked whats the point of blocking the bishop with a knight or a pawn and don't know how to answer. It seems like quite a strange idea to fianchetto and not as straightforward and logical as putting it on a natural diagonal such as on c4.
This is a typical Sicilian Dragon position.  The fianchetto Bishop controls the long diagonal which helps protect the King, by protecting the h8 square and providing luft, and attacks the opposing King.  The Bishop is able to control two center squares while one posted on c4 can only control one center square.
The Knight does currently obstruct the Bishop, but can move with devastating effect, Nxe4 uncovers an attack on the d4 Knight.  In lines where there is a Pawn blocking the Bishop, King's Indian Defense/Attack, the Pawn is pushed to release the Bishop or the Pawn is used for a kingside attack.  The Bishop is often in the way of the Rooks, but does still provide good defense for the King.

[fen ""]
1. e4 c5 2. d4 cxd4 3. c3 d3?! { (0.00 ? 0.75) Inaccuracy. Best move was dxc3. } (3... dxc3 4. Nxc3 Nc6 5. Nf3 e6 6. Bb5 a6 7. Qa4 Qc7 8. O-O Nf6 9. Re1 Ng4 10. Bxc6) 4. c4?! { B21 Sicilian Defense: Smith-Morra Gambit Declined, Dubois Variation (0.75 ? 0.15) Inaccuracy. Best move was Bxd3. } (4. Bxd3 Nc6 5. Nf3 Nf6 6. O-O e5 7. c4 Bc5 8. a3 a5 9. Nc3 O-O 10. Bd2 d6) 4... g6 5. Nc3 Bg7 6. Qxd3 Nc6 7. Bf4 d6 8. O-O-O Nf6 9. Bg3?! { (-0.24 ? -1.12) Inaccuracy. Best move was Qd2. } (9. Qd2 O-O 10. Nf3 Be6 11. Kb1 Qa5 12. Ng5 Ng4 13. f3 Bxc3 14. bxc3 Nge5 15. Nxe6 Qb6+) 9... O-O 10. f4 Qa5 11. Kb1?? { (-1.06 ? -7.19) Blunder. Best move was a3. } (11. a3 Nd7) 11... Nb4 12. Qd2?? { (-6.81 ? -12.80) Blunder. Best move was Qe2. } (12. Qe2 Nxe4) 12... Nxe4 { White resigns } 0-1

The Bishop plays a secondary role.  By controlling the long diagonal, it does support the attack.
By looking at Dragon games, especially Rxc3 sacrifices, you will find that the Bishop is excellent at attacking along the long diagonal.