Reverb is an effect in the domain of time. It is essentially adding an artificial echo to make the instrument sound "bigger." Most often, you can hear it on solo instruments to make them sound more full and fleshed out.
Other than that, in the real world setting, every type of instrument has some kind of natural reverb. On most instruments, they even have overtones, which are nothing more than sympathetic frequencies chiming at the same time as the main note. The type and amount of reverb is based on a number of factors, but above all the size and shape of the room. That is why you hear the term "better acoustics."
Picking the right reverb is more of a matter of personal taste. However, some quick thoughts would be how organic you want an instrument to sound. For instance, an orchestrated piece would call for large reverbs as most concert halls have extreme ambiances. A drum kit, would require a smaller reverb with more thought put into each piece of the kit (IE more verb on the snare and crash with less on the high hat and bass drum).
For your instruments, I would start small and then work my way up. Don't go overboard since you are going for a more organic sound, but do make sure each instrument is given a special touch by yourself.
Of course, that is just my approach. I am sure someone on here can give you much better advice. But as far as the arrangement goes, it sounds good. You could really use something to fill in some of the gaps though, as part of the arrangement sound a little thin. The ending would also be better if you could pull a few more bars out after the build up. It seems like too strong of a section to relegate it to such an abrupt ending. Just my two cents though. Keep up the good work.