Q: 1) Why Earth is not in thermal equilibrium with the sun? Q: 2) When a block with a hole in it is heated, why doesn’t the material around the hole expand into the hole and make it small?

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To be in equilibrium the heat in equals the heat out. The heat into the earth changes as our magnetosphere is deformed by solar storms. Our ozone layer varies during the year. Clouds change the reflectivity of our atmosphere. Gases hold in heat like greenhouse gases are changing. Thus our in and out values are not balanced. Think of the ball and ring experiment. The heated ring expands in all directions so the inner hole gets larger.