Hi Mark,
Business scenarios may require a reservation of a certain amount of items or inventory products to ensure the availability of these items during the order capture; this is when Inventory Reservation Process comes in hand.
Inventory Reservation is a key part of the production process, as it allows our business to maintain an effective supply and demand flow in a short term to keep the manufacturing and logistics activities effective.
Link shared by @WILL WU will help you to understand how D365 system behaves.
Here is a link to Set up manual or automatic inventory reservations
