The main purpose of your reel is to hold your fly line. Pretty simple right? But your reel does a lot more than that. It keeps pressure on the fish during a "run" and eases retrieval. Again, you want to size your reel with the line and rod weight. This will ensure the correct balance of your rod.
Just like fly rods, there are hundreds of different types of reels and prices range from $10 to over $1,000. No question that the more expensive reels are better quality that less expensive models. For the beginner, however, you should be able to find a good quality reel for under $50. So why the big difference in price? It depends on the construction material, type of drag system, arbor size, and if the reel is saltwater proof.
Construction Material – Reels can be made of many different materials ranging from graphite to titanium but most are made from aluminum. Expensive reels are machined from bar stock while less expensive reels are formed or pressed. Internal components include sealed ball bearings, stainless steels gears, and other parts.
Drag – The drag system is one of the most important parts of the reel. You should look for a reel that has a Teflon (or similar synthetic material) or cork drag system. The drag allows you to keep constant pressure on the fish preventing it from breaking your leader. Drag systems are fairly simple. As you tighten the drag lever, the spool is compressed on either cork or Teflon increasing the friction or pressure. Some reels have no drag system at all. The fisherman applies pressure with his hand to control the drag.
Arbor Size – The arbor is the inner cylinder that your line is wrapped around. There has been a lot of talk lately of the advantages of arbors with large circumferences. Advantages include less line memory, faster line retrieval, and most important, better control of hooked fish. A large arbor is certainly not a requirement, but you should look for the largest diameter arbor within your price range.
Saltwater Proof – If you are going to be fishing in saltwater, you should definitely purchase a reel that is sealed from the saltwater. This will increase the cost but it is necessary. A word of caution. An expensive reel does not mean it is saltwater proof.