If you add someone as a foe you'll be getting the following message instead of the post:
This post was made by [SpA]DrMcMoist who is currently on your ignore list. Display this post.
^^
If you click on "Display this post." you'll still be able to read it.
If you add somebody to your friends list their posts will be highlighted (if the forum has such an option in the theme template) and you will have easy access to their nicknames e.g. in PMs (if you're not using the PM button and choose to send e.g. bulk PMs)... I think they will be indicated with a different color on the online list or something as well. That's basically it...