What the Regan administration did was sell weapons to Iran who was under an embargo and then used the money that they made from it to finance Contra fighters in Nicaragua as well as to negotiate the release of several United States people who were taken hostage. This was illegal because it was an operation which broke both US and international law.
The reasons for the action were to help the United States hostages who were held in Lebanon by a group that worked together with Iran. The United States hostages would be released because of these transactions, while at the same time, the US could use the money to finance those who fought the Nicaraguan government which was a socialist one. That way, the US could hit two birds with one stone.
Reasons against it are mostly legal. Iran was under an arms embargo which means that no nation in the world that adhered to international laws should have been able to sell arms to them. Another was that the Reagan administration broke the provisions of the Boland amendment which stated that the US would not meddle in Nicaragua and would not support the contras.
The effects were almost non existent. When ti was discovered, there were talks of investigations and arrests and similar things, however, Reagan himself wasn't impeached or anything since it was proven that he didn't know how big the actions were, while those indicted were either released on appeal or were later pardoned by G. H. W. Bush.
