As has been explained in many other threads on the subject, no one completely understands rep. Even mods have admitted they don't fully know how it works. Many people are under the belief they do, but they are often in conflict with others who 'know' as well.
Mostly it was meant as a way to express appreciation for a person, rather than a particular post. There is some possible ties to rep and the green dots over your avatar, but that seems to be in debate as well.
There is a restriction on giving reputation to a person too frequently. Though the details behind it have never been explained. And it seems as though the restrictions are tighter now than they were before. Or perhaps that's just how it seems to me because i'm less able to give rep anymore, perhaps because i tend to give it to the same few people. But even spreading it around more hasn't allowed me to give it to certain people any longer.
The whole system is confusing and seems there's no way to really know. With the 'like' feature now on the site, it has taken over most of the rep usage. And rep wasn't heavily used when i first joined anyways.