In Spain and France, you will need seat reservations for most trains. Otherwise you can’t travel.

Here is a good guide to which trains need to be reserved: 

https://www.seat61.com/interrail-and-eurail-reservations.htm

From Madrid to Dortmund, it’s best if you search first to somewhere in France, then spend the night there. You could also take a sleeper train from Hendaye, Latour de Carol or Cerbère to Paris.

It might be a good option to pay your own ticket from Madrid to the French border and spend the night. Then you can travel to Dortmund in one day.

Good afternoon. I have bought a pass. But I have many doubts.1. Can I only travel with a reserved seat? What happens if I don't book on the train on which I already have a ticket?

No need to worry. There are many others that made their way using a train pass. Normally it’s shown in the rail planner app, if a reservation is mandatory. There are countries, where it’s hard to get them (e.g. Spain) and others where you may travel nearly reservation-free (e.g. Germany). On trains with mandatory reservations, it’s not allowed to travel just with a pass. What may happen: You are not allowed to board; you have to leave the train at the next station; you  have to pay a fine; nothing.   

2. How is the reservation made effective?

Unfortunately, that depends. Your best bet is to ask here for a specific connection. It’s possible to get many reservations with Eurail directly but there may be better (cheaper) options.  

3. Are there options to use 1 day pass for each final destination? Because from Madrid to Dortmund it only offers me to travel in 2 days.

Of course, if your final destination is thousands of kilometers away, it may not be possible to get there using just one travel day. But from Madrid to Dortmund it’s possible to do if you are willing to leave very early (6.30 or 7am) and spend more than twentý hours in trains (and arrive in the middle of the night, too). There’s a night train rule that helps: If you board a train before midnight, you may stay onboard until it reaches it’s final destination without using a new travel day.

Yes, just possible to do in one long travel day I guess. A horrible arrival time in Dortmund though.

You would need a reservation on the first AVE from Madrid €10, on the TGV to Paris €35, and on the ICE to Frankfurt €18.