Here is my overall post for the Battle of Britain in which I argue that the battle was one of attrition, and that the Germans were consistently losing that battle from the beginning. As for the "Blitz" portion of that battle, there are a few reasons why the bombing of civilian and industrial targets did not knock Britain out of the war. Despite the interwar theorists' predictions, bombers were not going to "always get through." Instead, bombers took extremely heavy losses without fighter escorts, and moderate losses even with fighter escort. Bombers couldn't fly higher and/or faster than the defending fighters, and the fighters had enough armament to bring down the bombers. The German bombers in particular were built for speed (the schnellbomber concept), but weren't fast enough to evade British fighters. Further, that concept of a bomber left very little in the way of defensive armament. Heavier bombers (such as the later American bombers and some of the four-enginged British bombers) could have substantial armament to at least make an attack costly for the fighters, but German planes sacrificed defensive armament for more speed. They also sacrificed payload capacity as their two-engined bombers could not deliver a heavy punch. In addition, navigation was difficult in daytime and devilishly so at night so even hitting your target of a particular city was hard--and hitting a particular factory was nearly miraculous. The German dedication to dive-bombing worked wonders in Poland, the Low Countries, and France but proved to be a liability over England. There is also the issue of the lack of range for the German fighter escorts, who often had mere handfuls of minutes of fuel once they reached London. Another complication was the Dowding System of radar, visual and audio observers, and efficient communications that allowed the British to get the most out of their available fighters and pilots. Finally, the effects on British morale were less than expected. Instead of capitulating or clamoring for their government to end the war (as predicted by the interwar bomber theorists) the British public rallied and were defiant.

So if I had to sum up, I would use this list:

• Bombers were more vulnerable than expected

• German bombers carried relatively small bomb loads and were inaccurate

• The Luftwaffe was spectacularly suited to fast campaigns on the continent but ill-suited for strategic bombing

• The Dowding System allowed Fighter Command to be efficient with their resources

• British morale proved to be more resilient than expected

I hope that answers your question. As always, followup questions from OP and others are encouraged.

Sources: Mainly James Holland's The Battle of Britain: Five Months That Changed History; May-October 1940. Also Martin Van Creveld's The Age of Airpower and other books.

Similar question ... have air strikes ever worked in history?

The theory is that the people will be so burdened by the bombing they will petition the government to surrender. But human nature is such that it just makes the people more united in their hate and fear of the enemy.

If taking The Blitz to be the independent operations of the Luftwaffe after Sea Lion was indefinitely postponed in mid-September 1940, then judging its success or failure depends on what the goals were. Obviously it failed to force Britain to surrender, but Richard Overy in The Bombing War: Europe, 1939 - 1945 writes that Hitler was sceptical of what bombing alone could achieve, and fully expected to return to the British problem after defeating the Soviet Union. The primary targets during The Blitz were ports, including London, with the aim of destroying facilities and stocks as a means of blockade, and the British aircraft industry as a means of undermining the RAF.

In addition to maintaining economic pressure on Britain, the continuing attacks contributed towards the impression that it was still Germany's priority, whereas from late 1940 the preparation for Operation Barbarossa had begun.

Damage to the British economy was relatively minor, considerably overestimated by the Luftwaffe, so in those terms the Blitz was also a failure, but it did contribute towards lack of Soviet preparedness for Barbarossa. It also pinned British forces in defensive positions such as the most advanced RAF aircraft (Spitfires were almost entirely kept for home defence until 1942), so Germany had a relatively free hand in the east in 1941. Overy thus concludes: "In this sense German Air Force claims were right: Britain's offensive war effort was curtailed in 1940 and 1941 by the bombing campaign and the expectation of its renewal".

The Luftwaffe was doing a pretty ok job of crippling the RAF and Britains infrastructure, ports, depos, railways and canals were hit pretty badly, the south east of London (the commercial part, full of warehouses, factories and docks) was also hit pretty hard.

The RAF was on the brink of collapse but then Hitler wanted to deal a moral blow to the British, the actual effect this had was to unite London like it never had before, the people the Britain rallied behind them too, it brought what had previously been a war fought in the continent and over the channel right to peoples' living rooms (no pun intended) I think this was what pushed Britain completely into a state of Total War, they knew everyone was in it together.

The other side effect this had was that a lot of pressure was taken off the supply chain and logistics of the RAF, allowing them breathing space.