A copy of a book given for publicity reasons by a publishing house, free of charge, to different individuals and corporations, such as critics and bookstores.
To avoid attempts of misusing reading copies for commercial purposes, the publisher marks each such copy in accordance. A hardcover book would be marked with a big black stamp saying simply 'READING COPY'. And a paperback book by a damaging cut out of the top left corner (assuming a right-to-left written book, naturally) of its front cover.
Publicity is the best way to promote the sales of a book, and lots of it. The best publicity is done free of charge by the sales persons themselves in the bookstores. The publishers are aware of that, and are quite generous when it comes to filling orders of reading copies.
A sales person, or a bookseller, as obvious as it sounds, would recommend a book he/she has already read. With a recently published book that is only possible through the reading copies. If the publishers can cause the bookseller to view their book as something more than a commodity, to be treated on a title-cover-basis only, then they have won invaluable 'screen time' for nearly no cost but the reading copy.
Same goes for the critics. The overall opinion of the review does not matter. As long as the book got the exposure it so badly needs, again - free of charge, in front of a well targeted crowd of readers.
The most important feature of reading copies is that I, as an insignificant employee of a small insignificant chain of bookstores, can get to read all the free books I want. Hell, if it wasn't for the reading copy I would never have read the great Lord Of The Barnyard.