Banking is digital, and thus functionally money in general is digital and has been since the 60s. The dollar itself is physical.
No central banks are proposing the use of a blockchain, as that would be a completely ridiculous and counter-productive thing to do. But some are investigating good old-fashioned centralized ledgers that work, can scale, are cheap to run, have reversibility, have fraud protection, have identification, etc.
Introducing a digital dollar would be a new piece of the financial infrastructure.
Possible reasons to want it might be:
1) Better auditability
2) Quicker for the government to send stimulus payments to boost the economy
3) Possibility of implementing new monetary levers like demurrage
Ultimately, whether it is implemented or not, would not make too much visible difference in our lives. And we would almost certainly carry on with using deposit accounts, because digital dollar accounts probably wouldn't pay interest. Most of it would probably just be held as bank reserves, and individuals would generally want to move it out of there unless the government got into the business of providing deposit accounts as well.
I don't think the US will be rushing to nationalize commercial banking anytime soon.
Improvements like Same-Day ACH and Zelle have been rolling out, and these are much more relevant to consumers.