The Reduce Only option allows you to set buy and sell orders intended to only reduce a current position, and not open an opposite long or short worth more than the existing value of your leveraged assets. This essentially means that you will not be able to execute more than you currently have in your position, allowing you to trade without running the risk of over-exposing your assets.
Example: If you have a long position of 300 EOS/USD, opened at 7.7381 USD/EOS, with a current market price of 7.7280 USD. As the ticker price goes up, and your purpose is to take profits out when it has risen to your expected threshold, you prepare for the forecasted scenario and place a limit sell order at 8.2 USD per unit, for the calculated maximum value that your assets can support, of 608.9984 EOS. Having the REDUCE-ONLY mark applied to the order will only allow you to execute 300 EOS, as that would be the maximum amount of units that can be traded without reversing the course of your position.