What happens when you reverse time in Animal Crossing New Leaf

You are punished for changing the game time (no matter how much, it seems), but not the system time. Here's what happens:

If you change the time on your 3DS system, Animal Crossing seems to simply think that's the time it is now. Trees grow, events change, the only "bad" things that happen would have happened with the flow of time. Even going back in time via this method seems to work okay, even when going to a day previously played.

If you change the game time, using the option at the main menu of Animal Crossing, you will randomly trip for a while after changing the clock. The duration of tripping seems to last longer than the current play session, possibly the full day? But it eventually goes away. If, however, you were to change the game time this way before every play session you would trip randomly every single session, which is highly frustrating.

Also note that going backwards in time will spoil any turnips you had, since the game knows you went backwards, while it doesn't know you went forwards if you go by the system clock.

tl;dr: Change your 3DS's system time to time travel, do not mess with the in-game clock regularly or will will randomly trip.

You can fix it by manually replanting the flowers, and plucking the weeds.

You can't really undo it at this point. The game recognized you as being away for a year, and your town progressed accordingly. There aren't any special mechanics relating to time travel beyond the normal passage of time going forward, time traveling to the future just accelerates things. Likewise, going back in time won't undo changes to the town (because you can't travel to the past in normal gameplay) -- so game data (the town) is manipulated and saved relative to the player's timeline as time passes.

If you wish to time travel again in the future, you can prevent changes to the environment by enacting the Beautiful Town Ordinance, which will keep your town in a persistent state (for the most part) while you're away. Villagers will still notice your absence, and your mail will still back up... but it shouldn't cause too much damage otherwise.

And for a bit of trivia... some of the other entries in the series did actually have penalties for time traveling, but they have been relaxed in New Leaf.