During the age of discovery and the time of colonialism why didn't larger powers just blockade the dutch or Portuguese in Europe then pick off there colonies? By Larger powers I do mean nations like Great Britain, France and Spain
I can't answer for Portugal, but in the case of the Netherlands: they tried. Oh they tried. Here's a quick list of wars:
Let's place this list in a bit of context.
Eighty Year's War
The Eighty Year's War (1568-1648) could be seen as the Dutch war of independence. But that would be too simple. Dutch independence was achieved de facto by 1609. In that year, after several years of negotiations, the Dutch and Spanish signed a truce for twelve years. This could have been a full-blown peace, but the Dutch didn't like Spanish demands regarding the colonies. The Spanish wanted the Dutch to guarantee that their ships would never sail south of the equator, basically requiring them to give up their colonies in the East. This was unacceptable. So the negotiations ended with a truce instead, set for 12 years, with no special provisions regarding trade or colonies. This proved to be somewhat of a mistake, and the truce only held in Europe. In the East as wel as in the Americas the Dutch and Spanish returned to competition by force even during the 12 years of the truce.
As the truce was coming to its end in 1621, the Dutch briefly contemplated extending it or even signing a peace. They didn't though. The period of the truce had been useful to build up the country and the economy, and now the Dutch felt strong. They were also still upset about the Spanish demands in the earlier negotiations. So the Dutch opted to continue the war, as it would be hugely profitable for them and would deny the Spaniards access to their northern ports (chiefly Antwerp, which the Dutch could easily blockade since they controlled the Scheldt estuary). The Spanish put up a decent fight, but by 1648 they had no choice but the accept full-blown Dutch independence, with no limitations on Dutch colonies or navigation.
Anglo-Dutch wars
All this time England and France were quite happy to let the Dutch do their thing. They were happy the Dutch were chipping away at Spanish power. That changed though after 1648. The English especially thought the Dutch were taking over too much of their trade with the Americas. The English Navigation Acts of 1651 were intended to reestablish English dominance over the Atlantic trade. This led to a direct confrontation with the Dutch, and to the first of four Anglo-Dutch wars. The English were quite successful in this war, as the Dutch had decommissioned much of their army and navy after the end of the Eighty Year's War. The fighting exhausted both sides, and in 1654 a peace treaty was signed which did not solve the rivalry in trading.
The Second Anglo-Dutch War was provoked in 1665 by the English particularly to end the Dutch trading empire. Both sides had successes in this war, but the Dutch came out on top - not in small part thanks to a daring raid by Admiral de Ruyter. In 1667 De Ruyter sailed his fleet up the river Thames, broke the chains which guarded the Medway, and attacked the English naval base Chatham directly. Several English capital ships were sunk or captured in this raid, and many more other naval vessels were destroyed. After this, the English could no longer stay in the fight, and a peace treaty was signed.
The Third Anglo-Dutch War coincided with the Franco-Dutch War and with attacks from Cologne and Munster. The Dutch Republic was attacked from all sides by English, French, and German forces. On land, the Dutch were in quite a pickle (I'll cover the French part in a bit.), but on sea the Dutch still outmatched anyone else. The English fleet was trounced in four naval battles. In 1674 the English signed a seperate peace with the Dutch.
I did mention a fourth Anglo-Dutch war but that was more than a century later and, as we will see, no longer relevant for your question.
Franco-Dutch War
At the same time as the English were getting trounced on the sea, French forces had invaded the Dutch Republic from the south. And they were quite successful. A large part of the Republic fell to the French in one year. Only the large scale inundation of the countryside (the "Dutch Water Line") kept the French out of Holland (that is the province of Holland, the richest and most important province with cities such Amsterdam, Leiden, and Dordrecht).
The Dutch regents had neglected the army for many years, as they considered it too much of a money sink. They'd rather spend their money on trade and luxuries. Now it almost seemed the French were allowed to simply walk into the Republic. The people were dissatisfied, and took out their anger on two of the most important regents, killing them in an absolutely brutal and horrific way (see my description of that in a post here). The regents had kept William III, Prince of Orange out of power for a couple of decades, but now the people welcomed Orange back. He was given command of the army, and started to recover the situation. 1672 is still called the "Disaster Year" by the Dutch, as the Republic was on the brink of destruction.
In 1673 the Dutch got assistance from the Holy Roman Emperor and from Spain (yes, Spain!). The goal of this large alliance was to reduce France to its pre-war borders. The rest of the war isn't that interesting, what's important here is that the Dutch Republic came out of this without losing any of its territory, and with a much stronger Prince of Orange. After being excluded from politics for two decades, he now was the saviour of the Republic.
Glorious Revolution
William III of Orange married Mary Stuart, daughter of James Stuart, in 1677. In this way, William became involved in English politics. The catholic James was unpopular among English nobles, who invited the protestant William to come to England and seize the throne with his wife Mary. In november 1688 Dutch forces under the command of William landed in England. As English protestants rallied behind William, James gave up resistance. With this so-called "Glorious Revolution" William III became king of England.
William III was still stadtholder in the Dutch Republic, but that made him nothing more than a civil servant - granted, the most important civil servant, but a civil servant nonetheless. (For more on that, see my post here.) In England he was a proper King. With one man leading both the Dutch Republic and England, those countries would now act in unison. The Dutch Republic, having resisted England for so long and now even having some control over it, became the junior partner in this though. William III held his court in London and many dutch merchants and nobles flocked to London to be closer to him. The Dutch Republic started a long period of decline because of this. During the 18th century the Dutch Republic wasn't nearly as powerful as it was the previous century. Army and fortifications were neglected. In the later part of the 18th century the Dutch were soundly beaten by English forces in the Fourth Anglo-Dutch War and later still they were overrun by French revolutionary forces, ending the Dutch Republic.
Conclusion
So in the end the Dutch weren't "muscled out" of anything. That was certainly tried, but all attempts had failed. No, it was an apparant Dutch success, the seizure of the English throne, which put an end to Dutch supremacy in trade.
Public notice: I was previously known as /u/edXcitizen87539319
Since you asked about both Portugal and the Netherlands, I'd like to add a bit of perspective to the answer by /u/Polybios .
Treaty of Tordesillas: Spain and Portugal
The Treaty of Tordesillas of 1494 divided the world between Spain and Portugal. A North-South demarcation line was set up halfway between Portugal's Azores islands and Spain's claimed Cuba and Hispaniola. Spain was to control lands west of this line, and Portugal east of it. On the other end of the globe, the dispute was solved by the Treaty of Zaragoza of 1494. Effectively all this gave the Americas to Spain except for parts of Brazil to Portugal, in addition to giving the Philippines to Spain. It gave the east Indies (India, Indonesia, most of east Asia) to Portugal, along with ports in Africa. As a result, the way trade was set up between those colonies and Spain/Portugal was that Spanish ships took westward trajectories across the Atlantic, and then across the Pacific to the Philippines. Portuguese ships went to Brazil or Africa and then to the Indian Ocean and up the east Asian coast as far as Japan.
Dutch Rebellion, Portugal Succession Crisis
Spain, or to be more precise the various possessions of Philip II and his descendants had various conflicts around the world, including against a Protestant England and a rebellious, Protestant Netherlands, starting from the mid 1500s and intensifying through the 1600s. While Spain's Army of Flanders was fighting the rebels in the Netherlands, traders from the Netherlands could still trade with Lisbon, thus they became aware of the sea routes to various Portuguese trading posts around the world.
In 1580, due to succession crises in Portugal, Spain's Philip II asserted his claim to the kingship of Portugal, thus setting Spain-Portugal under personal union. As he was at war against the Netherlands rebels and France, and eventually against England, these parties were no longer allowed to trade in Lisbon, and further they had incentive to attack Portuguese ships and posts around the world.
By that point Spain and Portugal had set up parallel trading routes with little overlap. Thus, while on the one hand Portugal now had access to sell goods to Spanish posts (including notably slave trade), Portugal was dragged into Spain's wars with little protection from Spain. In 1592 England captured a Portuguese fleet returning from Asia, thus setting the stage for England's own interest in the region.
The Dutch, previously partners in Portuguese development of sugar cane plantations in Brazil, attacked Portugal there to gain control of their own plantations. In Asia, they set up their own base in Batavia (today's Jakarta), then attacked Portugal's important posts in Angola, then in Goa, then in Japan.
Consolidation and Portugal's Restoration
Back in continental Europe, Spain's commitments in the Thirty Years War led to increased taxation in Portugal, and further enmity from belligerents in that conflict. Portuguese royals and merchants saw Spain as providing insufficient help even in Brazil, let alone Asia. Thus, they rebelled and this led to the Portuguese Restoration War. Even before the the restoration was complete, Portugal had started negotiations with England and Dutch that saw Portugal re-gain supremacy over Brazil and the Dutch over Indonesia. By the time Spain recognized Portugal's independence in 1680, Portugal was already left with a much smaller empire, most of which losses were to a former ally (England) and a former economic partner (the Netherlands).
Sources:
Since no one has mentioned it, my first response is that from before 1600 to 1800, the Netherlands had the highest GDP per capita in the world. So in that way, it was the largest power. I don't know exactly why it had such a high gdp, I'm sure arable land, moderate climate, and ease of irrigation (since the country is so flat) was important. My feeling is that The Netherlands was on its way to becoming an economic power before it became a Naval and sea-going trade power, and thus the internal economy generated the external strength. I'm sure the two must have developed together, but can we say which came first, economic power or naval power?
There was a balance of power. The great powers were fighting each other as well. Countries constantly switched sides. The French and English supported the Republic against Spain (80YRW), later the Spanish supported the Republic against France and England (Rampjaar) and finally the Republic and England fought France and Spain (Spanish Succession). The Holy Roman Empire, Portugal, the Pope, Sweden, Russia, etc. were all factors too at some point.
European powers fought for centuries and it took until Napoleon that "blobification" finally resulted in skewed sides. And even he was kept contained by the UK and Russia.
Also, colonies were lost. The Dutch took many Portugese colonies, and subsequently often lost them to England/the UK. New Netherlands (North America), New Holland/Zeeland (Australia/New Zeeland), South Africa and Ceylon/Sri Lanka are some examples. Formosa/Taiwan was also lost to Ming China at some point.
It should also be kept in mind that in the mid 1600s Portugal had about 1 million people, the Republic 1,5m, England 4m and France 20m. France was a powerhouse but England much less so.