Speficially, in the competitive environment, attacks like Calm Mind, Dragon Dance etc which raise specific stats are commonly used, Punishment makes use of this.

Punishment has a rather low Base Power to start of with, the game believes that it is 1, which is the value set for attacks that have varying power such as this, Gyro Ball, Fling and so forth.

Now, for every boost in stats that the opponent has, the Base Power for Punishment is boosted by 20. This is for Attack, Defense, Special Defense, Special Attack & Speed. For example, if the opponent has used Calm Mind, its Special Attack & Special Defense both will have been raised one level. This would give Punishment a boost of 40 in Base Power each time Calm Mind is used.

Many movesets have people utilising this move or other moves such as this and then passing them on through Baton Pass, overall the power soon stacks up giving Punishment a massive boost.

However, Punishment's Base Power is capped at 200, which is still a massive Base Power for any attack, with STAB it can be 300 and with the Dread Plate attached to the Pokémon, it even gets up to 360.

So that is the attack Punishment in a nut-shell. A very handy attack in the competitive arena