In my latest
blog entry, I wrote a short little blurb about this idea. It also links to a pre-built hosts list of advertisment and shock sites (ie, goatse.cx, tubgirl.com).
I don't really feel like going in-depth, because theres nothing in-depth to go to, but basically it redirects all those hosts to 00:00:00:00, rendering you absolutely unable to connect to them.