User blog comment:Tainted Brownjuice/Few questions about ranked!/@comment-9713132-20130201095122

In the new Ranked system, you do not play solely against the 250 people in your tier. In fact, matchmaking holds no regards to your tier directly - you still have an ELO, but it is not visible and does not work as the main ranking system in LoL anymore.

The best of 5 playoff (I belive, I'm not entirely sure) only applies to when you stand a chance of being promoted out of your tier (when you earn enough League points to do so). Concurrently, it appears that if you fail the best out of 5 match, you are kept in the current Ranked tier, and no other punishment is given other than you having to restart the quest to achieve a promotion again.