Muting is helpful when you are trying to ignore a toxic player that keeps spam pinging or flaming you.
Riot also recently added an option to disable chat itself.
Although I've had my personal experiences with trolls not getting banned even after they ran it down mid buying tier 2 boots in my ranked game, I do believe they do get banned. It's not at the same rate as punishments related to chat but they still do exist.
It's really hard to determine whether or not they're trolling and I definitely do think Riot should improve their system but it is a really difficult thing to accomplish, you wouldn't know that since you are only playing their game, not developing it.
My best suggestion when dealing with trolls/inters is to submit a support ticket through Riot Support and a Rioter will manually review the footage.