Others have mentioned Australia, and I concur that it works pretty well in most cases. The position is slightly complicated by the fact that we have compulsory voting, and so a high percentage of protest votes are informal (ie, invalid). In addition, some elections require that, for a vote to be valid, there must be a ranking against all the candidates, some (optional preferential voting) allow you to go down the list only as far as you want. The former makes the “one vote-one value” argument stronger, the second caters for people who can’t bring themselves to “vote” at all for a particular candidate, even if it is the last vote.
In practice, each candidate provides a “How to Vote” card to everyone who wanders up to the polling booth (yes, this is a huge waste of paper). The candidates will have each calculated their best option of game theory outcomes combined with issues of supporting like-minded candidates and the inevitable horse-trading processes involved (“I’ll recommend my second preference to you and in return, if you win and I don’t, you will enact policy X”). Each candidate thus comes up with an order for the punter to follow which makes it all easy enough, although there is no obligation to follow the how to vote card, and any voter is free to put the candidates in any order they like.
An unfortunate consequence of the process, however, is that the counting process takes a long time. Unlike POTUS elections, where the result is known pretty much straight away as a result of the use of machines and so on, allocating preferences and counting has to be done by hand, with scrutineers at hand. It can take weeks for individual seats to be decided, and recounts are a nightmare. Of course commonly one party wins handsomely, but not always, and the details of who has won which seat can be a drawn out process.
The consequence of all this is that we pretty much have the stability of essentially polarised political parties such as one sees in the US or the UK, but there is a capacity for subtle differences. Thus, there are two conservative parties (Liberal and National) and two progressive parties (Labor and Green) each at a slightly different position on the Left-Right spectrum, and there is no real penalty for this either by way of the Nader problem or by way of an instability problem because in the end the Parliamentary system requires them to get on, and they do.
A significant downside to our system is that the process for calculating Federal Senate votes results in disproportionate power going to minority parties, but that is not a consequence of preferential voting but of other aspects of calculating the Senate vote which are irrelevant to the OP.