for people who don't like reading too much text and technical data :
(well, I wrote too much too, sorry
)
all connected devices on internet have an IP address, but it would be too hard to remember them all when you want to connect to a server.
So, you use URLs instead.
DNS server provides servers IP based on server's URL.
example, you type : "nintendo.com", your browser ask the DNS server "what is the IP of nintendo.com?" and he gets "nintendo.com IP is 199.227.51.26"
then your browser can connect to server's IP
http://199.227.51.26 and display it's content to you, without you knowing it did something in the background.
What happens when you use a DNS to block nintendo's updates on your console?
when the console checks if there's a new update it uses nintendo's URL (instead of fixed IP hardcoded in the firmware, in case they change their server's IP), the DNS server reply a different IP than the real one for all Nintendo's update server's URL.
"please give me nintendo's update server" .... nah, you'll get a bad IP instead so you can't connect !
usually it replies "127.0.0.1" which is a loopback IP (the device itself, it's like "connect to yourself!")
sometime, it's giving a different IP, like how tubehax DNS sent youtube request to another website with a homebrew app.
Your ISP could use the same trick to restrict internet usage, blocking torrents, p2p, etc., using a different DNS unlock these websites.