yep, that thingie allow you to block unwanted Pms from a user. But i also allow you to "unwatch" his\her replies or topics. It means that you won't receive any notify when there's a new reply from him\her. But yes, you can still read his\her post in the main board. Just don't read them if you don't want
Also, remind that if your pm box is full, you aren't allowed to receive any more PM and that user can't send to you either. So when this happens, but you didn't use the blocking feature, check and clean your PM box.