Some trains like Nighttrains or High Speedtrains (For example Spain/France/Italy) need a reservation that you have to pay on top of the pass :)

Most trains are included however not every train in Europe, you can check what trains are included here: https://www.interrail.eu/en/plan-your-trip/trains-europe/trains-country .

 You can also check this information in the app: more → rail network guides (I personally like to use the app for this)

For your second question: your interrail pass never includes reservations, when reservations are required you need to buy these. I however never bought these so far. In a lot of cases there’s a slower alternative if you don’t want to buy reservations (I don’t mind going slow so I normally do that). When searching for trains on the railplanner app or website you can search for trains without reservations specifically.

Most of the time you need reservations for high speed trains etc. (not ICE). Also night trains require reservations. You can find information on what trains need a reservation in the app or link i gave above :)

Some trains you can buy reservations for but it’s not necessary, it could happen you have to stand up or sit on the floor when the train is full but I don’t know if that happens a lot.

Very well explained in the above comments. One addition is the page on which you can see the railway carriers that are covered by the Pass.