ISBLANK determines if an expression has a value then returns TRUE if it does not. If an expression contains a value, then this function returns FALSE.Whereas,
ISNULL determines if an expression is null (blank) then returns TRUE if it is. If the expression contains a value, then this function returns FALSE.
The ISBLANK formula field returns a TRUE while the ISNULL does not. This is because, when a Text field is left EMPTY, it is internally assigned with an EMPTY STRING and hence it is not NULL. The technical meaning of NULL is that it is not assigned with a memory for storage. Since we need some memory for storing an EMPTY STRING, it is obviously not NULL.
The ISBLANK returns a TRUE since the field does not carry anything(a value).