It's a blessing and a curse. On the one hand, it's easy to block out communities with racist, homophobic, and xenophobic views. On the other hand, it allows communities like that to become echo chambers and freely further their abhorrent ideals completely unchecked.
I don't think the ban hammer is the most effective method of shutting down nazi shit, but it's a hell of a lot better than shutting it out of sight and trying to forget about it.
Echo chamber will live no matter what. If they cant do it on reddit, they will do it on someplace else. Blocking them is the best we can do, as long as people that I dislike are still alive and have access to internet.