In a diesel engine, blow by is defined as the compressed fuel/air mixture in the combustion chamber leaking past the piston and entering the crankcase. Blow by is not good since it robs engine power and builds up gas pressure in the crankcase. There are reasons for blow by, and by understanding them, you can make the necessary adjustments.
Normal Blow By
All diesel engines have some degree of blow by. This is due to engineering. When metal heats up, it expands. Metals expand at different rates. When heated, aluminium expands faster than steel. Engineers have to compensate for the differences in temperature expansion. They do this by designing the aluminium piston slightly under size from the steel cylinder. If they designed the piston for a snug fit when the engine is cold, the piston would seize inside the cylinder when it heats up due to thermal expansion. An undersized piston leads to blow by when the engine is cold. As the engine heats up, the piston expands, and blow by disappears under normal operation. This is considered typical cold engine blow by, and it is unavoidable.
Worn Cylinder Walls
As the diesel engine gets older, the cylinder walls wear out by constant piston and piston ring scraping. Over time, the cylinder bore becomes bigger by this constant scraping. The end effect is that "slop" or a gap is created between the piston and cylinder. The gap between the piston and the cylinder wall becomes significant; and as a result, compressed gases are free to go around the piston.
Worn pistons cause blow by. Just as the cylinder walls wear out and the bore becomes bigger, the piston becomes worn and becomes slightly smaller. Bear in mind that aluminium is a soft metal, and grit accumulation in the combustion chamber carves grooves into the piston. These grooves are an ideal place for the compressed fuel/air mixture to escape into the crankcase.
Researchers at the Helsinki University of Technology ran extensive studies of piston rings and concluded that worn rings are a source of blow by. What happens is the constant scraping of rings back and forth in the cylinder eventually wears them down, and their sealing capabilities fail. Blow by happens in front of the ring, but the gases also "sneak" around the backside of the ring when the sidewalls become worn.