If you want to know more about ping and latency in gaming, I suggest those good reads:
Short and general Wikipedia article on Ping
Short Wikipedia article on "client-side prediction"
Long and in-depth article
Some players get an unfair advantage because of their ping (they seem to teleport, always hit you with short range weapons even though you are 1 km away, etc.). I don't think anything can be done about it. When this happens, I just leave.
Also, remember that yellow/red ping players are never exactly where you think they are. A pro player is usually fast and might just be closer than you think.