Here’s a simple encounter model: You have an objective. You undertake a challenge to accomplish that objective. You receive a reward.
Congratulations! You overcame the obstacle and got the goody!
…Now what?
In a games context, a reward should most often serve as a beginning, not an end. That simple encounter model above is one cycle of a loop, a repeating sequence. Which is to say, that reward can very effectively be used to engage players in what happens next, to encourage them to participate in the next cycle of the objective-challenge-reward loop.
Let’s look at it in the terms of my favorite toolbox, self-determination theory.
Mastery
This is the big one. In tabletop RPGs, rewards often heighten the sense of heroic competence. The player obtains a better sword, new spells, improvement to a skill, a new Discipline, or better resources. Rewards often take the form of new or improved tools — which players then bring to bear against future challenges. They’re endogenous rewards: They serve to reinforce and improve the function of game systems the players have already demonstrated an interest in using. You like fighting orcs, so you fight orcs, and as your reward for fighting orcs you get a sword that makes you better at fighting orcs. Fighting orcs is intrinsically rewarding, and you just got better at it.
In additional to the improvements to character, players also gain an increasing understanding of their ability to act upon the world. Level-based systems used to take a lot of stick, but their increasing palette of options in fact works very well for keeping players from feeling paralyzed by a breadth of options. As player mastery increases, so does the significance and competence of their interaction with the world, because they learn to manage more options and they develop an understanding of combinations of options. Few players thrive when having everything available to them at once.
Autonomy
Wisely used, rewards open additional options to the player, or otherwise reinforce their volitional decisions. In a timeworn example, the players rescue the princess (objective) by slaying the dragon (challenge) and then gain access to the realm (reward)… where they find a host of new objectives to pursue. This is sometimes referred to as “gating content” (especially in video games), but it serves a greater function as a reward mechanism, and is also often used in onboarding players to new options, which is especially frequent in level-based systems. As the player grows increasingly familiar with their character’s abilities, their understanding of how they can use those abilities expands, increasing autonomy. Now that the realm is open to you, bold adventurers, what next? Now that you’ve deposed the tyrannical Prince, ambitious Kindred, what will you do in the domain? Now that you have the plans to the orbital battle station, you unintentionally noble space pirates, what will you do with them?
Relatedness
I often like to describe relatedness in terms of “the rewards of rewards.” Going back to our example of saving the princess, the players were granted access to the realm — but that’s not all. As they traverse the realm, NPCs they interact with greet them as “the dragonslayers!” and they see firsthand how their efforts have aided the realm: A scorched field showing signs of growth, burned villages being rebuilt, the sanctuary once again opens its doors. One of the intangible benefits of their actions is seeing the meaning of those actions, and understanding the improvement or aspiration that they’ve made possible.

You find a jar with parts of Stevie Nicks inside it.
Rewards that suggest more to the world satisfy relateness very well. Finding a key suggests there’s a lock somewhere begging to be opened. Finding a map suggests a destination, or perhaps a journey.
Relatedness can also take the form of reputation systems, for example, which lead to future opportunities. This can scale up to a sense of kingdom-building or the expansion of domain, development of “tech trees,” or access to portions of the coterie chart that were closed. Relatedness is part of what makes communities function, so a sense of ongoing betterment of the home base is a very satisfying reward, even if it confers no mechanical benefits. And as that community betters, new objective opportunities open up for it, which feed the players back into the loop.
Inverting the Expectation
One of the default assumptions with rewards is that they’re all rainbows and sunshine for the recipient. That doesn’t have to be true. As a GM, consider over-rewarding the players every now and then… but with certain strings attached, especially if those strings aren’t immediately evident. Sure, you’ve found Excalibur, but now Modred and Morgan La Fay are after you.

A reward can be a burden more than a boon, or invite new responsibility.
This is a reward technique to be used sparingly, but it’s compelling. In doing this, you must design the reward to be worth the extra trouble, but you don’t want to train your players to dread rewards. In this case, the players are gaining outsized mastery rewards as well as some additional relatedness rewards. Interestingly, there’s some amount of curtailing of their free will (autonomy) at this point, but it may actually increase their sense of volition, as they opt into being the caretakers of this particular artifact. Consequences are interesting after all. And what if the players decide that having Excalibur isn’t worth the added responsibility? How do they get rid of the damned thing?
As a Player
Constructing rewards typically falls under the purview of the GM in tabletop RPGs, but players can use their rewards to stimulate the process, as well. The simplest way to do this is in outlook: The very act of understanding rewards as a staging point rather than a conclusion is important for players to not only take satisfaction in their progress, but to project future goals. (See the previous post for more on goal-setting.)
Rewards can also send clear messages to the GM. If the party chooses to sell the Armor of Fire Resistance, that’s a pretty definitive statement that they won’t be interested in the journey to the City of Brass where they’d have to dance at the whim of the ifrit lord. Readily yielding the identity of the rogue ghoul to the Tremere Primogen is a fairly declarative that the coterie is more interested in the political story then they mystery subplot.