It hides the content of posts (which you can see by clicking a link), but not the fact that a post was made. I don't believe it blocks PMs or rep. All in all, I think the ignore feature is worthless. You're basically hiding posts when if you really have a problem with a person, you should be taking it up with them, or in the case that they break the rules, the administration.
I guess it's just a lazy way to ignore your personal problems, but that's just my opinion. I never felt easy just ignoring posts from a person that I could have dealt with in a better way.
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since Sep 2004