If you ignore someone who is on your buddy list, that person will be removed from your buddy list and added to your ignore list.

When you ignore someone, you no longer see what that person says (you see blank text instead),; you will not hear them if you/they are using voice chat. The person you are ignoring will not be able to e-mail you, IM you, summon you, invite you to a club or event, give you anything, lend you anything, or open a trade with you.

Generally, you can still initiate contact with someone you are ignoring. Making contact does not remove that person from your ignore list. To remove someone from your ignore list, go to People > Ignoring > Stop Ignoring.