Every season I notice that I get a message asking whether my team would like to participate in a reserves league and a U-something league. I've always enlisted a team in both, so I'd like to know what happens if you refuse to participate.

What are the benefits, what happens to the reserve players, and are there any financial benefits?

If you decline, your reserve and U18 teams will have no matches unless you make friendlies for them. I dont think there is any financial gain in them. Just a way to help youngsters progress and first teamers to keep fitness.