Well that law, like lots of laws, is open to interpretation by judges/the legal system/etc. That's how laws and judges and trials are mostly supposed to work. The judges/jury didn't ignore the law, they merely had to interpret the law and see if the facts of the case fit it or not.

I believe the crux was that the law said it was illegal to have porn that showed damage to the anus, so does fisting fall into that category or not? The outcome was no, fisting doesn't count as damage to the anus. The "stupid law" wasn't ignored, it wasn't a case of "people using their own moral compasses", it was a jury & judge interpreting a law, like normal.

That it even made it to court meant there was a case to answer

The cynic is me notices that the accused was a lawyer who helped prosecute corrupt police officers.