The 'What is reputation?' section of the FAQ briefly explains what is reputation, how to earn it, and what privileges you can earn by having enough reputation. However, due to the nature of being a FAQ entry, it is not possible for it to go into too much detail about the different privileges.
However, there is a nice page on the site that does this (and is shown to users whenever they gain new privileges). I think that it would be useful to add a link to this privileges guide under this section of the FAQ. Besides when a notification about earning new privileges pops up, there is no easy way for new users to find this very helpful page.