True reincarnation (heroic, iconic & racial) are the full reset, start at level 1 again one that yes, resets all your favour. As stated above, you lose all the benefits of the favour feats but keep the enhancement trees you've unlocked on that character, assuming you haven't bought them in the store or via an expansion which is a permanent account-wide unlock. You also retain any tomes you've used, though their benefits will be added progressively as you level.
Lesser reincarnation is the rebuild-type (minor gripe, people call it an epic TR, but it's really a reset of the epic levels & an LR for the heroic, you don't lose favour etc), you retain everything but just get to reallocate all your stats & appearance, but not gender, race or alignment. With a + heart, you can change classes a certain number of times, subject to the usual character alignment restrictions & you're not allowed to have more than 3 total classes at any point in the process (it's complicated but explained in the wiki, but this is why the +20 hearts also usually come bundled with a free +5, so you can use the +5 first to switch out the minor splash class completely then you have more leeway when doing the +20)
Once you unlock 32point builds (via store or favour unlock), a 28 point build character will be freely upgraded to a 32point build if you perform an LR - if you do a TR, it'll jump straight to 34points (the 32 point upgrade just for that character plus the extra +2 from the 1st TR). If you've used tomes then the benefits will apply through the levelling process too, meaning an easier time meeting feat prerequisites vs. 1st time around & more skill points if you've used an INT tome.