A blog, on the other hand, is an application that should be written on top of all this. It would make more sense to me include this as an example application.
It seems pretty obvious to me that the intent of creating the "ruby new blog" command was to make it extremely easy to install the example blog app. However, by doing this, they are marketing rails as a magical framework. The framework auto-generating you a whole blog isn't really a good hello world program; it didn't teach me anything about how rails works.
I remember back when ruby first came out (I'm sure a lot has changed since) I was watching videos that introduced it, and every time the presenter would say something like "Hey you want a blog? Just type magic make me a blog command, and now you have a fully functioning blog with a built in CMS." I remember thinking to myself, "but I'm not building a blog" and then I went back to my PHP. I'm not saying this was the correct reaction, perhaps I should have instead gone and investigated it further, but that's how it was marketed, and I found it off-putting.