Reservations are not offered.
Lounge access is first-come, first-served to guests staying at Bay Lake Tower on reservations made through DVC member services. They do not guarantee that the lounge will be open every night--it could be rented out for private functions. Although those situations are few and far between.
Those wishing to visit the lounge must check-in at the lobby podium. After the Cast Member verifies you are eligible to visit, they will grant access to the lounge.
Only modest appetizer-type food is offered. Flatbreads and other small items. Seating in the lounge is limited but there is an outdoor deck which (theoretically) holds several hundred people. Reaching maximum occupancy has never been an issue. A typical night's crowd is well under 100 people, with most arriving just a few minutes before the fireworks begin.
BTW, I don't believe the water pageant can be seen from the lounge. The windows face the Magic Kingdom.