Since Leaverbuster detects players that AFK/Leave, does reporting for AFK ACTUALLY do anything?

Yes, if LeaverBuster didn't notice. If LB gets them, there's an X through their portrait at endgame (new client). If they AFK for a short enough period of time, that system won't notice, and that's where the report comes in handy.

It's usefull if they are afk in the "not playing the game" meaning. Running around in the base etc.

Adding context to their AFK assists in deciding their punishment. Going afk after giving first blood wouldn't be dealt with the same was as afking the last 5 minutes.

LB will pick up AFKs who do things like run back and forth or dance at the fountain to avoid getting DC'd. The game is only listed as a leave if the player is dc'd at the end. Leaving and coming back may not show as a leave, but it still counts towards a penalty.

There are ways you can effectively AFK without being detected by LeaverBuster. The AFK reporting option is there for that reason. Regardless, I report for AFK even if I know LeaverBuster will get them (name red in post-game screen).

I always assumed the AFK option was for the style of AFK that leavebuster won't detect. E.g. if the guy is playing in a way that operates like an AFK, then I report it because it's part of an overall toxic mentality. From there, I think the upshot is it gets factored into other reports as well.

I don't think leaverbuster works UNLESS someone reports. Because I have been disconnected, unable to reconnect in occasional games (as in, I was AFK for 20+ minutes) and still haven't gotten leaverbuster. And sometimes, I just reset my computer, hop back in 2 min later and still get LB.