1: The ban won't be removed from your profile, but they don't count anymore. e.g. You are banned on the 1st Janurary 2016 for the first time, then you got 3 more bans, so now, you have 4 bans. The 4st ban was 1 month long. Now, you can get on the 2nd Janurary another ban, and this ban would be 1 month again instead of the because the first was over a year ago. The bans which are not counting anymore will get the color yellow, but the rule explained in question 2 still applies.
2: If you got two times a one month ban, like stated in the example above and this bans expire, so you don't got any ban for one year, the next ban still will be 3 month, because the 2 bans before where both one month long.
Anyway, for the 2nd question, there is already an example given in the rule itself.
"For example, if you have already had two 1-month bans, your next ban can be extended to 3 months. If you have two 3-month bans, your ban can be extended to perm. Note that bans that are extended due to it being your 4th, 5th or 6th ban cannot be removed, they are strictly 1 month, 3 months and permanent."