When you create an all-day event in Google Calendar, it’s marked as Available by default because a lot of people use all-day events as reminders or milestones. However, if someone is using the “Find a Time” feature to schedule time with you, they may not know you’re busy. If you are actually going to be busy because of the all-day event, you should edit the event and change the availability setting to Busy.
Once you change this setting to Busy, your day will appear blocked off to anyone using the “Find a Time” feature when creating an event. This behavior has changed over the last year, so if you were blocking off your calendar in addition to an all-day event, you may no longer find the need to do so.
For comparison, see the “Find a Time” views below in which we are attempting to schedule with someone who has an all-day event on his or her calendar. On the left, the all-day event has been left as Available. In the one on the right, the all-day event has been changed to Busy. You can see how the all-day event with a busy status blocks off the whole day in the view on the right.