Alright so I've heard a lot about LoL. Most of it bad, but I don't care.

It says "League of Legends is free to play!".

But everyone else says you have to spend money on the game, what exactly do you buy on this game?

You can buy Riot Points. They are used for unlocking new champions instantly and for getting new skins for them. Also you can buy EXP boosts and IP boosts. You can NOT buy runes using Riot Points.

Champions - if you dont want to play with those 10 which change every week. (can be also bought with IP which you get from every game.. amount depending how the game went)
Skins - to make your champions look kewl
Boosts - to boost your EXP or/and IP gain

I guess there your money goes but I've survived pretty well spending $0 on this game.

Well, is it even possible to be competitive with spending 0$? Paying real money for heroes sounds kind of unfair to those who can't/won't

You don't have to spend real money for champs. You can unlock them by just playing.
Of course, that takes a lot of games, depending on which champion you want to unlock permanently.

You can still be competitive without spending a cent on the game. It might take a bit more time, but that's not necessarily a bad thing: if you play more to get to the same point as someone else, chances are your actual game experience will give you a little edge over them.

In the end, spending money on this game doesn't give you an advantage in power. You might be able to specialize on one champion more easily, and you might get some nifty skin for your favorite hero.
You might also get to have all those rune slots and masteries available sooner, but you'll still have to work for everything that will really make a real difference in power and skill.

So LoL is pretty much just a F2P DotA with micro transaction?

Well I don't even know anything he is talking about so..

I wouldn't worry about costs, as this game is completely free, you just choose to pay for it or not.

Yes but does paying give you an advantage like in Free2Play MMORPG's?