Using a heart of ice to freeze a category prevents you from getting an item in that category.
For example, if you freeze Firemaking, you will not get any Firemaking lamps or stars. You can also freeze categories, such as Lucky Items. If you've frozen the Lucky Items category you won't get any lucky items such as lucky chaotic rapiers from spins. They will visibly have an ice block around them when they're scrolling through under the chests on the interface.
You spend 1 heart of ice per frozen category, and you can freeze a max of 10 things at a time. So if you use all your 10 freezes, you will spend 10 hearts of ice every spin, so long as you have enough.
You get hearts of ice every day from regular spins, when you buy spins, and when you find a key from skilling/killing.
If you freeze an item and land on it, you won't get that item and will get something else instead, it can be a higher level or same level prize, or lower level if you froze a higher level item.
Let say you freeze a white level star. If it lands on that star, it will reroll and give you something else, which could be anything not blocked, even purple or red or orange or yellow or even a white level prize from a different spot on the wheel.
Now lets say you block all red level prizes except one. It will not force you to get the one remaining prize you wanted, but reroll possibly giving you a white level prize.
Also, if you block a white level prize and don't change what you have blocked on the next key after, the next turn that space may have changed to a different prize, and you could find when you blocked a white star, the next turn it blocks a red prize instead. So change the things blocked each time before you use a key.Hi.
It's not common. I've received maybe 2 or 3 in all my TH time? And the XP it gives it relevant to the level of the skill you're using it on. You will get different XP for a skill at level 10 vs a skill at level 99.
There's a table on the Wiki detailing how much XP you get depending on the level of the skill you're using it on: http://runescape.wikia.com/wiki/Huge_XP_lamp