Some skills give a
Reflect prevent the damage to the target and reflect it back to the attacker?
Retaliation also reflects damage, but it does not prevent the damage.
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As far as I know, the attribute is reflect projectiles, not just reflect. That, indeed, completely negates any damage and conditions you could receive from a projectile when it comes in contact with you, then sends the projectile back at its original source. At this point it "reverses polarity", so it will pass safely through targets friendly to you, but collide with and deal damage/conditions to targets hostile to you.
According to the official Guild Wars 2 wiki article on Reflect, yes, it will block incoming projectile damage and return it to the attacker.