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There are a number of threads on this topic with EXCELLENT explanations that you can search out, possibly even linked at the bottom of this thread too!
In short, reputation is a way of determining how good or bad a person's POSTS have been on this site. Not whether or not they themselves are good or bad people. (though people with high negative reputation points tend to be people not worth listening to, imho).
Whenever someone says something that makes sense in the sort of way that makes you say "That was perfectly said" I give them a positive reputation point. I give those a lot more freely than negative ones. I have given negative points to those who recommend violence, spew profanity, break all the rules, or are just out-n-out jerks as evidenced by whichever nasty post they've recently made.
As a contributing member, in the USER CP section, you can see who has left you your negative and positive points. As a Paid Participant, I believe, you can only see what the comments on, but not who left them. I enjoy those comments. Frequently I'll see a good post that makes me think of a short one-line comment I've wanted to make to the author of the post so instead of a private message, I often send them a short message via the reputation system. I think it's a great system, even if it is abused from time to time.
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