It doesn't really work at all. Banning by IP address is unreliable. Very few people actually have static IP addresses. Every time you dial in, you'll get different modem, and each modem will have it's own IP address associated with it. It's unlikely to get the same number twice in a row. An ISP could easily have 20, 30, 50, 100+ lines. Cable and DLS connections can also change from time to time.
If my IP address gets banned, if I'm on dial-up all I have to do is hang up and redial and I should be able to get right back to where I was. Similarly, I could just issue a command to my cable modem or cycle the power, and it could nab a new IP as well. There is another way though. A range of IP addresses could be blocked. This could effectively block out an entire ISP. The user would have to switch ISP's in order to get around it, which is more bother than it's worth for most people. It's also worth noting that the dedicated individual could just spoof their IP address and get around the block as well. Ever tried to block spammers by their email address? It's the same type of thing. The forum software could probably be written in such a way to get around this to an extent, but most software isn't written with security in mind so it wouldn't surprise me if they weren't. What I mean by all of this is that I could write a program to just send the data to post a message and then put a fake IP address in the header. If the message board doesn't need to get a second confirmation from the user, then it will just post it and send the "your message has been posted" page to nowhere (the fake IP address). Of course the poster doesn't really care, because their message got posted anyways.
Of course there's a downside to all of this blocking as well. If an entire ISP is banned, suddenly no one from there can get access at all. This obviously isn't a desirable situation. Even if single IP addresses are blocked, an innocent user can have that address allocated to them and they will be blocked. This is why I say that IP blocking really doesn't work. It's OK for small sites (where the chances of someone else from the same ISP wanting to go there is slim (assuming you haven't decided to block out AOL...
), but for larger sites it would just be a nightmare. It could be "working" in that the user isn't likely to show back up, but then a lot of other people can't either.
On the other hand, I've never really been a forum manager, and for all I know they have some system worked out that gets around the limitations that I've mentioned.