The reality is that our reputation increases the moment we received "Upvotes" from users. That's the basic fact. The upvote value that we receive pertain a certain amount of Steempower - so as our reputation.

The bigger Steem Power holders upvoting as (and considering the voting weight placed), the bigger boost on reputation received. The computation for determining one's reputation is the accumulation of Vests a user received from the votes.

With the accumulation of Vests (Steem Power) from the votes received, a users reputation increases. The same thing it will happen with downvoting, a user's reputation will decrease when users downvote his posts (Steem Power and voting weight will still matter).