Creatures with power less than Champion of Lambholt's power can't block creatures you control. Whenever another creature enters the battlefield under your control, put a +1/+1 counter on Champion of Lambholt.
Champion of Lambholt's first ability applies even if it isn't attacking.
The comparison of power is done only when blockers are declared. Decreasing the power of a blocking creature (or increasing the power of Champion of Lambholt) after this point won't cause any creature to stop blocking or become unblocked.