Each block contains a Unix time timestamp. In addition to serving as a source of variation for the block hash, there are also validity checks, that make it more difficult for an adversary to manipulate the block chain.
A timestamp is accepted as valid if it is greater than the median timestamp of previous 11 blocks, and less than the network-adjusted time + 2 hours. "Network-adjusted time" is the median of the timestamps returned by all nodes connected to you.
Whenever a node connects to another node, it gets a UTC timestamp from it, and stores its offset from node-local UTC. The network-adjusted time is then the node-local UTC plus the median offset from all connected nodes. A single peer never adjusts your time by more than 70 minutes, however.
Bitcoin uses an unsigned integer for the timestamp, so the year 2038 problem is delayed for another 68 years.