lori,
As the others have said, reservations aren't required on all trains, but usually MANDATORY on high speed trains (TGV, IC, ICE, etc.). These are NOT included in the cost of a Railpass, but ARE normally included if you buy P-P tickets.
In my experience, it's not necessary to buy train reservations before going to Europe; it's completely unnecessary and often more expensive (why bother even having to pay a $50 flat fee?). As mentioned in another post, I usually buy the reservations for my outgoing journey when I arrive in a particular town. Since I'm at the station anyway, it's easy to do.
In my experience, it's HIGHLY advisable to have reservations where required. The Conductor will fine you on the spot if you don't have the correct documents (this happened to me in Italy - I had reservations but they were incorrect in some way?)!
I also had one occasion where I had reserved a seat, but found someone else there with the same number! They had double-booked the seat!