It has a real and dramatic impact on a few things - I got CPU warnings from one server a couple weeks back because I'd inadvertently broken logging and fail2ban stopped working and someone was doing a persistent brute force at high volume for 8 hours.

After I fixed fail2ban it dropped off immediately. I know some WordPress plugins will do this but I've not had much success with them compared to fail2ban so it's still my default for this purpose.

Are there better system-level approaches than fail2ban in this case? Or is your comment mostly directed towards those using it for ssh blocking?

It's no substitute for proper security, but it's a great mechanism for quickly dropping naughty traffic. Even people who practice good security have online systems that are occasionally vulnerable to zero days, or have password forms on webapps. Dropping traffic while it's still in discovery mode is a great way to frustrate automated attacks.