The neat part is not the blocking of the search results, that isn't really anything new. The new and neat thing is that Google, for the first time, is admitting to using such a blocking feature towards their ranking algorithm. Well, they said they would explore using such a feature in their ranking algorithms. So if you block this site and thousands of others block this site, Google may raise a red flag and use that as a ranking signal.
Google's Matt Cutts wrote, "One of the signals we're exploring is explicit feedback from users. To that end, today were launching an early, experimental Chrome extension so people can block sites from their web search results. If installed, the extension also sends blocked site information to Google, and we will study the resulting feedback and explore using it as a potential ranking signal for our search results."
So how does it work?
(1) Install it using Chrome over here.
(2) Search Google and if you see something you don't like, then block it using the block link:
Yep, that simple. But if you ever want the results page, you need to go to the extension preferences or click "show" at the bottom of the Google search results when you see results were blocked by this extension:
Then a list of blocked results will come up.
Of course, like any human backed search quality metric - it can be abused. So don't think you need to tell Google that. I am sure they get it.