What does "Reactivity" do in the controller settings?

I found this to be more of an irritation than useful. As mentioned by @CaptGrogbeard above it dampens the inputs. I found that there is thus a “lag” between when I apply a control surface change and when it actually happens. I did not like it.

When you say the rudder is too sensitive, do you mean for taxiing or flying? If it is the latter, my suggestion is to change the curve on the rudder pedals so that the initial input has smaller effect. The down side of doing this of course, is that at the end of your rudder pedal travel there will be a very abrupt change. If taxiing is the problem, I change the configuration file settings so as to achieve a more realistic effect (for most of the sim aircraft and even third party aircraft, even a small rudder input on the ground results in a very aggressive turning movement of the aircraft. This is not realistic especially at very low speed and/or very little prop wash)