Technically, the member is supposed to be occupying the discounted room, but if Member Services sees that the Member has a reservation for the same time frame, at the same resort, they probably "let is slide." Which to me seems like kind of a common sense thing to do for extended family staying at the same time on a family vacation.
Yes, you book through Member Services, if the discount isn't available when you initially book the room, call back from time to time and see if they can apply the discount later.