This article discusses the basics of choosing a fly fishing reel which is right for what you intended to do. Fly fishing reels do two things. They store fly line, and they provide drag against a fish as it fights once landed. Most are made from aluminum. Be sure to check the quality of the reel - some cast molded aluminum reels are made cheaply, and can break more easily than solid block models. Beyond that, two different types of reels exist for the fly fisherman: the Spring and Pawl, and the Disc Drag reel.
The Spring and Pawl Fly Reel
This is the traditional fly fishing reel. Its advantage is that it provides for a very smooth, even pull-out as lighter, more sensitively-mouthed fish (like smaller trout) draw on the line. Particularly when using lighter tippets, this type is a good choice, since it protects the tipper better.
The Disc Drag Reel
This is the newer type of reel, designed much like a disc brake on a car. These types of reels are good for larger species or larger fish, as they can more easily exert a stronger tension once a bigger fish has attacked. Their main drawback is that they tend to be not as smooth as the Spring and Pawl reel. For most fishing conditions, this is probably immaterial. But on truly smaller pan fish species, smaller or more wary trout, the Spring and Pawl reel is probably the way to go.