Orders with the Reduce flag can only decrease the size of your position. They do not subtract from your cash balance.
If you are short 20,000 contracts and you place a Reduce Long order for 30,000 contracts, the order quantity will automatically be scaled down to 20,000 contracts.
If you then submit a new order for 10,000 contracts, the new order will be cancelled, as it would, together with the previous order of 20,000 contracts, increase the size of your position.
The Reduce flag is useful when you want to close a part of your position (or all of it) and don't want to risk having so many orders filled that you end up going into the opposite direction (e.g. going Short when you are Long).
It is also useful when you don't want to reserve additional margin for open orders. This is because orders with the Reduce flag consume existing margin instead of new margin.
Close Orders submitted through the trading interface or API automatically carry the Reduce flag.