The THEORY: Friendly players report a toxic player's behavior, and the more this happens, the more likely the toxic player will be punished by restrictions and bans, making the community a friendlier place.
The REALITY: Toxic players report friendly players whom they blame when they lose the game, and the more this happens, the more likely the friendly player will be punished by restrictions and bans, making the community a more toxic place.
The entire system is automated - the report button is just a griefing tool used by toxic players. It used to be looked over by people, and the punishments were fair, but it's that way anymore.
Check out this link, and read this guy's ban report. There are lots of incidents like this, but I'm not going to post tons of links - this one can stand for all:
https://www.reddit.com/r/leagueoflegends/comments/36xcya/banned_for_literally_nothing/