How to return to the Lost Bastille bonfire

No, it doesn't affect the entire named area. It only affects the area between the bonfire on which the ascetic is used and the next bonfire. All enemies after the next bonfire will not be affected. For example, the first Aldia's keep bonfire will affect the rats outside the keep, the black phantom within the keep, the mirror knight enemies, the ogre and the giant basilisk but will not effect any enemies beyond that point as they all fall within the vicinity of the second bonfire, despite all the enemies beyond that point still belonging to Aldia's Keep. If you used an ascetic on the second bonfire, then all the aforementioned enemies would not be affected, and only the enemies between the second bonfire and the boss (including the boss, as the boss is 'associated' with the second bonfire) will be affected. I know it's a poor explanation, but hopefully it gave you an idea as to how the mechanic works.

It will continue to increase the difficulty of the area permanently. All Enemies will return to 'full health' even if they had not yet despawned. This carries across playthroughs as well. If you beat the game and end up in NG+, that area will also respawn as 1 more '+' than it was before. So if you had burned two Ascetics in your first playthough it will be NG+++ in your NG+ playthrough.