When you click on Reporting structure in the work tab of operator record, you will see a chart of who reports to whom. It is based on values specified in Reports To filed for this operator and for other operators in loop.
For Example, in my application User reports to Manager, Manager reports to Priyabharathi.Ayyasamy, Priyabharathi reports to Administrator, you will see a chart like below.
A place where you make use of this reporting structure is for cascading approval.
For a approval step you can choose approval type as cascading and select approval based on Reporting structure.You can configure how many approval levels you want either one(approval from only submitter's reporting manager), all ( everyone in the reporting structure) or custom number can be defined).Here approvals move up along the submitter's reporting structure.
Hope this helps in understanding the use of reporting structure.