If a cache is placed on this list it will not appear in the GPX or ZIP files available from the caches list page, nor will it appear in the list of caches on the screen.
A cache can be added to this list by going to that caches particular page and clicking on 'Ignore' in the sidebar on the right.
You can view/edit your Ignore List by going to the My tab and selecting 'Ignore List'
At the moment you will need to remove the cache from your Watch List if you have it there also.
This feature does not have any effect on the mailed out version of the state GPX files as these are non-user specific.