Silk reeling is pretty hard to describe like this but it is about utilising energy and getting the movements more flowing... I find that alot of my taiji has mirrors in silk reeling... there are a couple of books that describe it fairly well (and I will dig out the titles for ya when I get a spare moment) but the best way to find out about it is to do it really...
I would say movement and use of energy in the form and movments... but I am only a beginner at this and there are books on this out there that do a much better job also look around the web.. a good book is The Dao of Taijiquan or Chen style taijiquan...
Fine cloth, fit for an emperor... It develops continuity, speed, fluidity, conditions the soft tissue, connects/coordinates body movements, develops internal strength, etc. Pretty much everything the form does, just in a simplified version(in terms of ease of repetition and movement), so the essence may be grasped and transferred on to the form training. But the form or reeling training is only as good as the amount of internal elements you or your teacher can incorporate in to it. Not the gospel, just what I think.