Reverb: Abbreviation for reverberation, a complex blend of multiple interacting reflections within an enclosed space which combines with the direct sound from a source and defines the character of the sound in a room or hall. It is also used for a signal processor which can generate an approximation of natural reverb. (Caution: do not confuse with 'Echo' - a different effect altogether.)
Flat refers to a balanced full spectrum frequency response. A good system will reproduce close to the 20-20,000 cycles per second, also called "hertz", or Hz. When you have peaks and lulls throughout this cycle, you can experience such things as "boomy" bass, "overblown" midrange, or "sibilant" highs. The goal is to level out all frequencies in a room. A graphic or parametric equalizer can adjust these frequencies to help flatten out the response. Room treatments, such as curtains, area rugs, (things to cover hard surfaces like walls and floors) help reduce reflections for a better response.