What, precisely, does "reset network settings" do on an iPhone?
According to this Apple support page,


  This will clear your current cellular and Wi-Fi network settings,
  including saved networks, Wi-Fi passwords, and VPN settings.


So, it will reset your network connection options, and it will affect internet connectivity, both GSM/GPRS/EDGE/3G/4G and WiFi, but it shouldn't impact "classic" telephone services, because they are usually auto-configured by the carrier and do not require specific settings on the mobile phone.