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The weapon made use of the stolen planets transported to the Medusa Cascade, captured by the New Dalek Empire, along with the unique Z-Neutrino-based energy source of the Crucible. This bomb worked by cancelling out the electric field holding atoms together, and was capable of wiping out the entire universe and all of creation, except for those within or near the Crucible, fulfilling the Daleks' stated goal of wiping out all other life in the universe many times over. Once the weapon penetrated the time rift at the heart of the Medusa Cascade, it would spread into every parallel universe and alternate dimension (even the Void) as well. The reality bomb was planned to destroy all other forms of life in every universe — except for the Daleks, allowing for them to be the only race in all of existence, at last attaining their long term goals.
The reality bomb was actually an electromagnetic cancelling wave, the emitters of which were several large, luminous green hemispheres set into the exterior hull of the Crucible. Each hemisphere was contained within a ring of panels which resembled the slats on a Dalek casing. There was a smaller scale version located inside the Crucible which was used for a successful test firing on a group of humans.
The Tenth Doctor and his companions were successful in preventing the use of the weapon on a large scale. It was shut down using an internalised synchronous back-feed reversal loop, and then destroyed when the Crucible exploded. (TV: Journey's End) The reality bomb weakened the dimensional walls, allowing some of the Cybermen that were trapped in the Void during the Battle of Canary Wharf to escape back into the universe. The rest, along with the Daleks that also fought in the battle, perished, according to the Doctor. (TV: The Next Doctor)
Behind the scenes
Though never explicitly verified, it can be inferred that the Reality Bomb is the cause of the spreading "darkness" alluded to by Gwyneth (TV: The Unquiet Dead) and later observed as the stars going out in several different realities. (TV: Turn Left, Journey's End)
The Daleks would years later attempt at conquering Earth again by the use of a Reality Bomb, and the Twelfth Doctor would need help from handpicked humans to stop them, by using micro:bits and battery packs combined to make their own sonic screwdrivers to defeat them. (NOTVALID: Doctor Who and the micro:bit 2: Defeat the Daleks)