I have http://www.marinecenter.com/fish/eels/goldendwarfmorayeel/">this</a> one in my reef. There's a pic on my blog... second page I think. It's literally my favorite thing in the tank. Not everyone appreciates eels, I think Dakota said it looked like a skinned frogleg :). If you do want an eel in the reef though like I did, then this is the only one that is "reef safe". I have tiny gobies, small flasher wrasses, small shrimp, snails, and hermits. This thing doesn't bother any of them and in fact many of the fish bully it around!
I'm not sure what they eat in the wild because they don't have the sharp front teeth of a fish eater. Nor do they have the rounded teeth of a crustacean crusher. They almost appear toothless. It's been in my tank for a long time now and doesn't hurt a thing. That being said, who knows what it might eat if it ever got the urge. So far its been nearly a year and so good.