Ignores Target's Defense modifier is found on various Unique Items and can also be added to a weapon by Socketing the Jah rune. The name might be somewhat misleading, in that it actually does not mean you will always hit the target. It means that the target's defense is set to zero, so, while your odds of hitting are greatly increased, your Character Level is also factored against the target's level, and the actual to/hit percentage will depend on how that formula plays out. The greatest to hit percentage possible in Diablo II is 95%.
The chance to hit is calculated by following formula:
100 * AttackRating / (AttackRating + EnemyDefenseRating) * 2 * AttackerLevel / (AttackerLevel + EnemyLevel)
If we Ignore Target's Defense, it will simply change to:
200 * AttackerLevel / (AttackerLevel + EnemyLevel)
This means that if you still want to hit enemy with 95% chance, your level can be roughly 10% lower than the enemy level.
Ignores Target's Defense doesn't work in player versus player and does not work against Act Bosses. If a hireling is equipped with Ignore Target's Defense item (such as desert mercenary with The Reaper's Toll), it has no effect either.