Does banding still exist and how does it work in modern Magic rules?

Banding is a real, still-functional keyword ability covered in the Comprehensive Rules under CR 702.22. It has not been used on newly printed cards since the mid-1990s (last major appearance was in Legends and The Dark era), but all existing cards with banding work exactly as written under current rules.

Banding has two main effects. First, during the declare attackers step, any number of creatures with banding—plus at most one creature without banding—can be declared as a band, attacking together as a group (CR 702.22b). Second, and more importantly, when a banding creature is blocking or being blocked, the controller of the band chooses how to divide combat damage among the banding group's opponents or among blockers, rather than the defending or attacking player making that choice (CR 702.22f, 702.22g).

The damage-assignment control is the most powerful aspect: normally the attacking player assigns damage to blockers in order, but if a blocked creature has banding, the defending player assigns that creature's combat damage. Conversely, if attackers form a band, the attacking player assigns all damage from blockers to the band members however they choose.

Example: You attack with a 2/2 with banding and a 3/3 without banding, declaring them as a band. Your opponent blocks with a 4/4. Because the band contains a banding creature, you choose how the 4/4's combat damage is split—you could assign all 4 damage to the 3/3, saving your 2/2, which would normally not be an option without banding.

Because of its complexity and absence from new sets, banding is considered one of the most confusing mechanics in Magic's history. Its rules occupy a large section of the CR specifically to handle all edge cases (CR 702.22a–702.22i).