Yes, that's correct, we can only book rooms that are in the member-owned inventory with our points.
There are 3 ways that a
DVC villa can end up being bookable for cash by CRO:
1. Disney retains ownership of a small percentage of inventory (< 10%) at each resort. They can, of course, rent these out through CRO.
2. When a member trades out of the system, say, to use their points for a
DCL cruise, the cruise line expects to be paid cash for that cabin. So, in order to make the exchange, DVC sends a villa of comparable value over to CRO to be rented, and uses the proceeds to pay the cruise line.
3. At a certain number of days out from arrival, unreserved DVC villas go over to CRO to be rented to the general public. This is called the "breakage inventory". If a member calls and wants to book one of these "breakage" villas, it can be pulled back into member inventory and booked on points. Proceeds from villas that are rented for cash come back to DVC to offset our dues.