There are 3 restaurants currently that participate in the Fantasmic package -- Hollywood and Vine, Mama Melrose, and The Brown Derby. When you book PS, you request the Fantasmic Dinner package. There is no extra charge for this package (just the cost of the meal). At the restaurant you are given a voucher that enables you to a special seating at the show without having to wait 2 hours. Doing it this way you don't have to arrive 2 hours early to get a seat -- you can get there 45 minutes to a half hour before the show and get a seat.
Definitely worth it in my book -- we're gonna eat dinner anyway, and there's no sitting for over an hour trying to keep our kids occupied. Others say it's not absolutely necessary to do this, especially if you go off season when the show doesn't get as crowded. We always go in the summer, so we take advantage of it.