A breeding tank should have a substrate, plants or caves (depending on species of fish being bred), filter, heater if required, coverglass, and it should be full.
If you are breeding fish that scatter eggs among plants or in the substrate, then you remove the adults after breeding and reduce the water level. The reason you lower the water level is so the fry and fry food are closer together. If you have 20 baby fish in a 2 foot tank that is full, the babies have to swim long distances to look for food. By reducing the water depth to about 4-6 inches, the fry and food are much closer together and the fry are less likely to starve.
As the fry grow and become stronger swimmers (usually after a couple of weeks), you can increase the water level.
If you are breeding cichlids or other fish that show brood care, then leave the tank full because the fry are usually bigger than fry from fish that scatter their eggs among plants, and the parents keep the fry together so they can be target fed. This entails using an eye dropper to direct fry food to the fry.
I agree with Colin's post. One further thing, on the bare substrate, there is a school of thought in this hobby that this somehow means a cleaner tank, but nothing could be farther from reality. If you clean the substrate every day, or twice a day--and by "clean" I do not mean siphoning off detritus, I mean scrubbing the glass with some form of cleaning agent, then maybe...but this is frankly not realistic.
The substrate is the most important factor in a healthy biological system. Many different species of bacteria live in the substrate (not in the filter many of these) and this creates a healthy ecosystem. Provided all else is balanced, a sand (sometimes fine gravel depending uppon fish species) substrate is well worth having, essential actually. There is significantly less risk to the fish, especially fry, but all fish.