Can anyone explain what the purpose of reputation points are on this forum? Also, what impact and potential benefits does it have?
Rep acts as a peer to peer form of moderation. Members expecting to do business on DP should (in my opinion) use it as a barometer in what is acceptable and what is not. Members who are new to DP and come in and insult/put down others may find they quickly become branded as a jerk or worse. By default members start with ten rep points which gives them the opportunity to learn the error of their ways and behave themselves before gaining red rep. See rep sticky at the top of Suggestions and Feedback.
Look at the top of this page, click on settings (see upper right hand corner), scroll to bottom of page, and you will find rep comments.