The reach is the distance between the end of the threads and the seat of the spark plug. It does not include the electrodes or any extended metal shell.
How is it measured?
The reach can be measured using a set of Calipers.
How does it affect performance?
Reach determines how far the plug "reaches" through the cylinder head. If it's too long, it could hit the piston. If it's too short, the electrode won't reach far enough into the chamber. This can result in reduced combustion efficiency.