It litterally stops any attack(just about) and sends it back at you. It's basically yata mirror except smaller but gives the attacker something in return.
Mainly because it doesn't have a huge relevance in the story line and likely works only against smaller attacks like the rasengan, but attacks like katon goukakyu and such have too large a surface area for the fan to cover and the user of the fan would, in reality, be pretty vulnerable to being fried to a crisp.
Because most attacks probably wouldn't be reflected. I don't see a full-scale bijuu dama being reflected or a large scale
attack of any sort really. Or, it just might take a lot of chakra, with larger sizes requiring more chakra, making reflected
something like Shisuusenjuu impossible for Madara due to the chakra taxation.