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In my opinion, the impact of the Reagan Revolution on federalism was mixed.
On the one hand, Reagan talked a lot about giving the states more power and the federal government less. The article that I have linked to discusses how Reagan's budgets stopped a lot of federal money that had been going to the states to help them with various programs. This, again, gives the states more of a role and the federal government less.
On the other hand, Reagan also was willing to use federal money to force states to carry out certain policies. The one I remember best is the fact that he forced states to raise their drinking ages to 21. He threatened to withold federal road funds if they did not.
So in many ways, Reagan empowered states, but he was also willing to force states to do things if he thought that was appropriate.
While in office, Ronald Reagan instituted what he called the "new federalism," which reduced the role of the federal government in the lives of people and gave the states more power. He believed that market forces would create prosperity, so he cut taxes and federal government assistance programs. Many programs, such as school lunch programs, were put under state, rather than federal, control. New federalism tried to give the states more control over programs that were formerly controlled by the federal government. Before Reagan, many federal funds were given to states as categorical grants, which dictated how states could spend the money. Reagan sought to return some autonomy to states. Under Reagan, the amount of money given to states decreased, and federal funds were given to states as block grants, rather than categorical grants. Block grants had fewer dictates about the way money was spent. As a result of Reagan's policies, states had to pay for much more on their own, and they often were in debt.
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