HTML comments in a javascript block?

This is a previously non-standard feature that browsers and JavaScript engines have always implemented. Nowadays, it cannot be removed from the Web platform, as that would break backwards compatibility. It’s detailed in the JavaScript / Web ECMAScript spec:

<!-- must be treated as the start of a SingleLineComment — equivalent to //.

var x = true;
<!-- x = false; // note: no syntax error
x; // true

--> at the start of a line, optionally preceded by whitespace or MultiLineComments, must be treated as a SingleLineComment — equivalent to //.

var x = true;
--> x = false; // note: no syntax error
x; // true

var x = 1;
/*
multiline comment!
x = 2;
*/ --> x = 3;
x; // 1

Update: This is now upstreamed to the ECMAScript spec. For more background info, see Sunsetting the JavaScript Standard.

No, there is no reason to include them. I regularly omit those comments and have no problems with modern browsers.

Actually, only <!-- is valid javascript. To end the html comment in javascript, you actually need to use //-->.

These days it's not really required to use the HTML comments in Javascript anymore. Browsers which are so old as to not understand the <script> tag are highly unlikely to be able to render much of anything on a "modern" website, and you should not have to accommodate users who are quite literally on a stone-age browser.

However, if you're intending to include your HTML inside an xml document, and/or are writing x-html, then you'll have to use the xml <![CDATA[ and ]]> enclosures, as various Javascript operators (&, <, and > in particular) will cause XML parse errors without the enclosures.

<script> inside strings set via innerHTML never runs (primarily because it never has in IE and then sites depended on that, so when other browsers reverse-engineered the innerHTML implementation they had to do that too). The HTML comments there are a red herring.

If you need the <script> to run, you need to use some other method of inserting the nodes (e.g. createContextualFragment).