How exactly do jr passes work?

Hi there

There is two things that are important here. Reserved seats and Non-reserved seats.

The JR Pass is your ticket to all trains in Japan. You can take any non-reserved seat by just showing your JR Pass. Local trains, like the JR Yamanote line don't have reserved seats. However Shinkansen and limited express trains also have reserved seats. If you want to make use of a reserved seat, then you have to make a reservation beforehand.

Hope this helps,
Daniel