The reality bomb was a super-weapon created by Davros for the use of the Daleks. It had the potential to cause absolute destruction by annihilating the matter of all reality.
History
The weapon made use of the stolen planets transported to the Medusa Cascade, captured by the New Dalek Empire, along with the unique Z-Neutrino-based energy source of the Crucible. This bomb worked by cancelling out the electrical field holding atoms together, and was capable of wiping the entire universe and all of creation, except for those within or near the Crucible, fulfilling the Dalek's stated goal of wiping out all other life in the universe many times over. Once the weapon penetrated the time rift at the heart of the Medusa Cascade, it would spread into every parallel universe and alternate dimension (even the Void) as well. The reality bomb was planned to destroy all other forms of life in every universe - except for that of the Daleks, to make them become the only race in all of existence.
The reality bomb was actually an electromagnetic cancelling wave, the emitters of which were several large, luminous green hemispheres set into the exterior hull of the Crucible. Each hemisphere was contained within a ring of panels which resembled the slats on a Dalek casing. There was a smaller scale version located inside the Crucible which was used for a successful test firing on a group of humans.
The Tenth Doctor and his companions were successful in preventing the use of the weapon on a large scale. It was shut down using an internalised synchronous back-feed reversal loop, and then destroyed when the Crucible exploded. (TV: Journey's End) The reality bomb weakened the dimensional walls, allowing some of the Cybermen that were trapped in the Void during the Battle of Canary Wharf to escape. The rest, along with the Daleks that also fought in the battle, perished, according to the Doctor. (TV: The Next Doctor)
The Eleventh Doctor mentioned the reality bomb to Amy Pond after encountering Dalek survivors of the Medusa Cascade. He explained that it was a machine that "could erase all of creation with the press of a button." (TV: Victory of the Daleks)