The British Board of Film Classification (BBFC) denies extensive use of protractors. Rumours, fanned by newspaper articles, had long led me to imagine small, dedicated groups of BBFC examiners, in their Soho Square headquarters, pausing sex scenes at the judicious moment, reaching for a mathematical instrument, and assiduously checking "the angle of the dangle". Is the man on screen aroused? Are the examiners looking at a Sid Soft, Maurice Middling, or Harry Hard-on? Does the scene conform to the much-discussed Mull of Kintyre rule – that no male member can be allowed on screen at an elevation more pronounced than the southernmost tip of the Scottish peninsula?

Over lunch with three BBFC staff, I broach the protractor question. David Cooke, director of the board, looks faintly perplexed. "It sounds like a bit of an urban myth," he says gently. "I mean, broadly speaking you will not see real male erections below an 18 [certificate]. But at 18 it's OK."

He takes another bite of fish, and considers. "Probably the nearest we get these days to getting out the protractor is on language." They have reluctantly concluded there is no substitute for counting the swear words in a film. "It doesn't mean that's the only thing we look at – particularly with the f-word and the c-word – we'll look at whether they're comically mitigated, or aggressively aggravated, for instance. But if you don't count, you discover there's no stable boundary. So the rule of thumb is four fucks maximum at 12A."

This approach hasn't been universally popular. In 2010, producer Stephen Woolley wrote that he was "horrified" to receive a 15 for Made in Dagenham, rather than a lower, less restrictive certificate, because of the swearing. And in May this year, the film-makers behind The Angels' Share, including director Ken Loach, reacted angrily at having to restrict themselves to seven uses of the word "cunt" in order to secure a 15 certificate. The film's scriptwriter Paul Laverty argued: "'You wee cunt' is often a term of endearment … There are many films they have given a 15 certificate to that I think are full of pornographic violence or racism or cruelty that is not fit for 15-year-olds, and they show that with no problem at all, so I think there is tremendous hypocrisy."

Which shows that 100 years after it was first set up, the BBFC still has the power to irritate, upset and sometimes outrage. The organisation started as the British Board of Film Censors in 1912, and since then has weathered serious concern over political censorship, sex and violence on screen, and the hullabaloo surrounding so-called video nasties in the early 1980s. In 1984 the term "censors" in the board's name was changed to the less controversial "classification", but questions over its role continue. The essential argument remains the same. On one side are those who believe the board is too lax, allowing a tide of filth on our screens, corrupting the nation's morals. On the other are those who go so far as to believe it shouldn't exist, that people should be free to make up their own minds about what they watch, at what age, free of cuts or censorship, as we do with art or books or plays. The wind seems to be with the latter side. While the board insisted on cuts in more than a quarter of films in the 1970s, in 2011 that figure was down to 1%.

This could suggest a slide into obsolescence. But the board still regularly exercises its other key power: classification. Cooke says 23% of cinema releases receive a higher certificate than the one requested by the distributor, and he sees the board's core business as child protection. "If we didn't do what we do, children on quite a large scale would be having experiences of the kind that aren't age-appropriate. I think most people would see that as a pretty bad result."

Perhaps the most serious questions about the board's approach have arisen, over the years, around instances of violence in the real world. It has been claimed repeatedly that onscreen violence might be at least partly culpable for off-screen atrocities, a notion they have to navigate carefully. The research in this area is conflicted, says Cooke. "But what it does do is put out pointers and say: 'You've got to be quite cautious in this area, you've got to look very closely at this context.'"

There are 14 examiners on the board, plus two senior examiners, all of whom tend to have had other jobs, in areas including law, policing, teaching, film-making and social work. They view five hours and 40 minutes of material a day, from children's TV shows to pornography. Hardcore material is subject to an R18 rating and can only be sold in licensed sex shops.

Counsellors are available if staff want to discuss material they have found distressing, but there's no way of knowing how often they're used. "What we do know is that examiners are a fairly hardy bunch," says Cooke, "because they go through quite a rigorous selection process, and everybody sees everything. But there are occasions when examiners get quite distressed."

Catherine Anderson, the board's press officer, says she felt seriously nauseated by the horror film The Human Centipede II, which was sent in for classification last year. David Austin, head of policy, says an image from some Thai boxing footage the board uses in training has stayed with him. "The bone in this man's leg completely shatters into hundreds of pieces," he says, "and you see him try to walk, and his leg just completely collapses."

Another example that upset examiners was documentary footage of a man facing a firing squad. Half his face was blown away, but he remained alive, gasping for air. This scene was included in Terrorists, Killers & Other Wackos, a compilation of material too strong for news programmes, set to a hard rock soundtrack. It was "probably calculated to be viewed by young blokes when they were just about to go to the pub," says Cooke, and the board refused to classify it, making it illegal to supply the film.

The extensive explanation of the board's ruling includes the comment that the footage "has the potential to desensitise viewers, and perhaps even to incite some to harm others". But that same scene was allowed on another video – a serious documentary about capital punishment, which the board passed at 18, uncut. "That just shows how the same image can be legitimate or not, depending on the context," says Austin.

In November, the board's anniversary will be celebrated with a season of films at the BFI, and the publication of a book, Behind the Scenes at the BBFC.

This features contributions from a range of writers and academics, edited by staff, including senior examiner Craig Lapper.

Spider-Man (2002): some local authorities dowgraded the BBFC's 12 rating to a PG Photograph: Marvel Entertainment/Sportsphoto Ltd/Allstar

The board's roots lie in the 1909 Cinematograph Act, which partly came about due to fires sweeping through cinemas. Film had become very popular, very quickly; weekly audiences were to reach an estimated 20 million during the first world war. The act required local authorities to license cinemas and ensure they were safe – but they soon broadened their powers to start restricting what could be shown.

This caused chaos, says Lapper. A film company "could end up with a film being OK to show in London and Manchester uncut, then cut in Sheffield, cut differently in Brighton, and banned somewhere else". To pre-empt censorship by central government, the film industry set up the board.

It operates as a not-for-profit organisation, funded by the fees film companies pay to have their work classified – currently £6 a minute for a video work, £7 a minute for a theatrical release. Local authorities retain their statutory powers, and so can still potentially make their own decision to ban, show or classify a film differently to the BBFC. This is rare, but not unheard of. In 2002 the board classified Spider-Man as a 12, and some local authorities downgraded this to a PG, so more children could see it.

In the early years, says Lapper, the board was very strict. "It knew some parts of the country were going to be more liberal than others, and so I think there was a tendency to censor material down to a very safe level that everyone was happy with". In 1916, the board's president, TP O'Connor, drew up a list of 43 grounds for deletion. These included indecorous dancing, unnecessary exhibition of underclothing, subjects dealing with premeditated seduction of girls, the effects of vitriol throwing, and materialisation of the conventional figure of Christ.

"It's very easy to read some of those reasons, and think 'Oh, that's very quaint,'" says Lapper, "but actually some of those issues – like vitriol throwing – are not as divorced as you might think from today's concerns. In films for children, for instance, we sometimes still worry about imitable techniques.

"I suppose the other issue that doesn't play so well now," says Lapper, he continues, "is the board's involvement in political censorship, with films such Battleship Potemkin and Mother being suppressed. There was certainly an element, at the time, of worry, with the general strike and so forth, over whether it was possible these films might lead to revolution in Britain. Again, from today's standpoint that seems ludicrous. But perhaps then it wasn't quite so much." The board cut both Bolshevik and anti-Bolshevik films, so it wasn't necessarily a partisan decision, he says, "they just didn't feel politics was a subject for the cinema."

Because of those strong restrictions, most films rated A for adult in the board's early days would now be rated PG. One that's showing in the BFI season, 1932's Island of Lost Souls, was rejected for classification in 1933 and 1957, apparently because its narrative – a scientist conducting experiments to turn animals into humans – was deemed too horrifying. In 1958 it was granted an X certificate after cuts were made, and by last year it was classified as a PG on DVD, with those cuts restored.

Are there any early films which would actually be given a higher rating today? Lapper says there are occasionally jokes which "would be a bit fruity now. There's one Charlie Chaplin film, for example, where he accidentally puts cocaine on his food, rather than salt, and then acts in a manic way. Maybe at the time that was fine. Nowadays, in a kids' film, that would probably raise eyebrows."

The most controversial era in the board's history was the early 1970s, when changes to ratings procedures in the US meant more explicit material was being released. The first half of the decade saw The Devils, A Clockwork Orange, Straw Dogs, Last Tango in Paris, The Exorcist and The Texas Chainsaw Massacre. All caused controversy, either because the BBFC chose to grant them a certificate – or because it didn't.

The board keep extensive accounts of its decisions, including examiner's reports and correspondence, and the 1970s files bulge with letters from the Festival of Light, a group that included Mary Whitehouse. This group was concerned about Last Tango in Paris, which they thought highly corrupting, despite the board's decision to cut a key scene. A 15 January 1973 note states that after an establishing shot, "all shots showing Marlon Brando spreading butter" should be deleted. The cut was later reinstated.

There have been regular suggestions that levels of screen violence are being allowed to increase. In 2009, for example, on the release of Lars von Trier's film Antichrist, one former examiner at the board wrote to the Times stating neither he nor his colleagues, between 1984 and 2000, could attest to having passed "blood ejaculation from an erect penis, or auto-clitoridectomy".

Austin doesn't think violence is on the up. "When you look at some of the films from the video nasty era, like House on the Edge of the Park, which has lingering shots of women being mutilated, that just wouldn't be made today. It's always been rated, but with cuts. There's a really unpleasant sequence where a teenage girl is forced to strip and her breasts are cut with a razor blade. It's really highly sexualised."

But sexual violence is certainly a concern. In its annual report, published earlier this month, the board announced it was undertaking major new research into public attitudes to sexual and sadistic violence on screen. This comes after it refused to classify The Bunny Game, because its entire narrative concerned a woman being abused by a truck driver. And it only allowed a certificate to The Human Centipede II after 32 cuts had been made, including the "graphic sight of a man masturbating with sandpaper around his penis".

The board's research into public attitudes is part of a commitment to openness that started in 1999. To this end, it provides clear guidelines to explain the basis of its decisions, and publishes extensive consumer advice on its website. This adds to those short descriptions found in film listings – "contains strong language" for instance – and reads like the film notes of your most precise and sex-obsessed friend. Recent examples (no titles, to prevent spoilers) refer to "moderate verbal sex references, including a discussion about a woman trimming her public hair", "an undetailed reference to urination in a sexual context", and the exceptionally thorough investigation of an incident involving a penis vacuum pump, which concludes that since there is little clear detail of the penis, and no sexual gratification as a result, this fits the guidelines for a 15.

The board's public consultations have found discriminatory language is a real concern, says Cooke, and also that at the 18 level: "People think you should be free to make up your own mind about what you watch, provided it's not illegal or harmful. That means we do pass some very strong material at 18. But we're not just doing it because we're inventing it – that's in line with that particular public finding."

All this openness is one way of navigating a period fraught with questions about the BBFC's modern role. Given the enormous amount of film material that now appears online, is it still relevant? And can it keep up with the deluge?

Cooke, unsurprisingly, says yes to both points. He argues that the internet "means the need for guidance and a trusted regulator is greater, rather than less … Certainly whenever we ask the public 'Would you like to see BBFC symbols appearing on films that are downloaded rather than in the cinema or on DVD?' high percentages say yes." In recent research, 85% of people said it was important for the board's classifications to be available for video on demand content – rising to 90% for parents of children under 16. Austin says the board has classified more than 200,000 items of content for online distribution so far.

If film can be harmful, then staff at the BBFC – with their workload of sex and violence, softcore and hardcore – risk grave moral danger, surely? Is Cooke depraved? "In my own experience," he says, "you work out that the job is going to give you a fairly distorted diet, so I go to see films with the missus at the weekend. Much to my relief, I find I can still view them without worrying how many cunts or fucks there are." He doesn't find a tally starts running through his mind? "Thankfully no," he laughs.