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That is correct. Your "Foes" list hides their comments and prevents them from being able to respond to you. This applies to comments in both discussion topics (which is what you're viewing now), and comments in stories. It also prevents the user from sending you a PM.
I guess it's more of a "hide user" feature than a "foe"... just stole the wording from the old, old forums.
Note that this does not hide stories written by users on this list and you cannot make foes out of cortjezter, a moderator, or any of the story writers.
Quick note: My user is 100% foe-able as well. While I have admin access, my user account is not one of those above.