so what reporting does actually?

were you just reported?

Reporting is used in the current automated system that dish out chat restrictions and temporary bans. You will have to have done some real impressively dastardly deeds to skip chat restrictions and go straight to banning so don't worry too much about that. Perma-bans will always be reviewed by someone in Riot support before it's finalized.

Keep in mind as well that all reports are not equal. Someone who spams report after every game will have the 'weight' their report count for much less. Whereas someone who rarely uses it will count for more, to prevent people who threaten a report for unjustified reasons from abusing the system (as they tend to report much more).