it doesn't affect lvl at all, and it resets your main questline completely. (you can't choose to go back to a certain point its flat lvl 1 story) there is only alittle info on it from the fanfest LL
if it works like yoshi p described a story reset would have to work years ago.
yes you have to recomplete it to do current content, and it will also reset any trials/dungeons related to MSQ due to the switched are contented and can't be separated due to technical difficulties.
BUT that is only if it works how yoshi p stated from interviews years ago.
