The two most common reasons for resetting an iPad to the factory default settings are to prepare the iPad up for a new owner or to overcome a problem with the iPad that simply rebooting the iPad won't solve.
If you are planning on selling your iPad, or even giving it to a family member, you will want to reset the iPad to the factory default settings. This will wipe your iPad, erasing the settings and data, and returning it to the exact state as when you first opened the box. By wiping the iPad, you allow it to be set up properly by the new owner. You also protect yourself and your personal information by making sure all of the settings and data are erased from the iPad.
Resetting the iPad is also used as a troubleshooting tool. Many common problems can be solved by deleting the offending app and downloading it again from the App Store or powering the iPad down and restarting it, but problems that persist beyond these steps will usually clear up after resetting the iPad.
The first step to reset your iPad is to go into the iPad's settings. This is the icon that looks like gears. On the left-hand side of the settings, choose the General settings and scroll down the page until you see "Reset". This is the last option in the general settings.