So, any damage which is dealt outside of combat is applied right away as the effect resolves. On the other hand, any damage dealt in combat is only applied in the apply damage step.

So Blood Dragon Knight's ability, which deals damage equal to its power when it attacks, would not apply right away since it occurs during combat. Is this correct?

Is the entire Battlefield phase defined as combat? Or is combat only occuring once attackers have been declared?

Thanks

There is a difference between damage during combat and combat damage.

Blood dragon knights' ability isn't combat damage.