The Reds are unexpectedly (at least for me) contending this year and they appear to have a good chance to stay in it until the end, in part because the division is weak, including the Cardinals (although I wouldn't be completely shocked if they ran away with it). This is not typical for the Reds: they haven't won a playoff game since they swept the Dodgers's in their 1995 NLDS.
Since the 1975 World Series, they have been in 7 playoff series, and 6 of them have been sweeps (the lone exception was the 1990 NLCS, where they beat the Pirates 4-2). They swept the Phillies and the Yankees in '76, were swept by the Pirates in '79, swept the A's in '90, swept the Dodgers in 1995 and were swept in '95 by the Braves.
Since then, the closest they got was a wild-card playoff in '99 against the Mets, where they were shutout by Al Leiter (Steve Parris started for the Reds, lasting 2.2 innings, followed by Denny (Neagle), Danny (Graves) and Dennys (Reyes)).
The good news is that they had a month of having amongst the worst pitching in baseball, and were still around .500. They also had a few below average offensive months and still ended up around .500. They don't strike me as the kind of team that will put up solid, consistent numbers and go 17-12 every month, but they could continue around .500 most months and put up a lot of wins in one. It will probably be a rollercoaster and they'll need St. Louis to keep playing poorly too (their problem has pretty much all been offense).
They're even more unpredictable now too, with two of their starters pitchers (Aaron Harang and Homer Bailey) on the DL. One of the young pitchers in their starting rotation, Travis Wood, nearly threw a perfect game last week, though, so they could have some tough decisions coming later this season.
Another piece of good news is that Nick Masset, who was very good for them out of the bullpen last year, has rebounded from a dismal start (11.32 ERA in April) and is pitching well now (1.59 in July). They're also getting help from a rookie named Logan Ondrusek, who also started slowly (11.25 ERA in April), but hasn't allowed a run in 15 of his last 16 appearances.
The problem in July is that they're not scoring runs (13 R over their last 6 games, including two straight shutouts going into the break). It's probably just a dry spell instead of a long-term problem, and they're still 5th overall in runs scored.
The good news is that they probably don't have to worry about most of the NL Central and the wild card is a possibility in the NL, even for a team only 7 games over .500. They have a good shot at sticking around in the race until the end, and maybe even winning their first playoff game in 20 years.
Update (7/19): They now have the best ERA in the ML in July (2.42) after allowing 3 runs over 3 games to the Rockies (taking 2 out of 3) in their first series after the break. That isn't like to change with them having a 4 game series coming up against the Nationals (25th in runs in July) at home this week.