If it helps I think in terms of low cost airlines. You buy a ticket to fly (your pass) and you have to pay a little extra for a chosen seat (your reservation). These are effectively mandatory reservations. Like airlines, trains requiring reservations do not allow more passengers than seats so no standing allowed.
Several years ago British Airways actually operated regional flights with a guaranteed turn up and go option. (They actually had a back-up plane that was available if the first one was full that would depart 10 minutes later). This is similar to optional reservations where when seats run out you can still travel but may need to stand.
For trains without reservation you simply add details to your pass before boarding and travel.
For trains with optional reservations you can either take the chance of finding a seat or standing or pre-purchase a guaranteed seat. You then only use the reservation to eject errant passengers from your chosen seat.
For trains with mandatory reservations you have to pre-purchase your guaranteed seat and present it in addition to your pass with the details of the train added. Reservations are always a separate item to your pass, even when bought through Interrail.