A reed spacer can do the following:
1. Increases crankcase volume.
2. Moves the tip of the reeds further away from the piston.
3. On some engines it moves the reed away from the boost port so that the reeds backstops do not hinder flow into the boost ports.
4. It makes the carburetor not fit the stock air box properly.
For the LT500:
It will help the intake flow a little on a stock cylinder with a full skirt piston. A stock engine does not need additional intake flow until the engine is modified.
On a ported cylinder that has the correct shaped intake port and piston skirt modification the reed spacer is not necessary.
My dyno testing shows that the reed spacers on MY modified engines does not hurt the power nor does it help the power.