In the past if you were penalized by the most popular search engine Google, it was pretty much a death sentence.
You could completely clean up the site, file a reinclusion request and own up to the various methods you’ve employed to try and gain an advantage over your competitors.
Things such as inflating your link popularity through excessive link exchanges, buying links, cloaking, hidden text or hiding content from your visitors, and the list goes on.
Your site may be added back to the index after a review and you served some time in the penalty box, and you might even get some of your toolbar PageRank back. But the site would never really enjoy the traffic and rankings and that it could have pre-penalty phase even if you weren’t coloring outside the lines.