We tried this package on our first WDW trip this past July. The food was pretty good. I liked their desserts. It's a buffet so you can have as much or as little as you want. Your waitor will give you a small piece of paper allowing the number in your party entrance into the Fantasmic Dinner Package special entrance.
It is recommended that you arrive at the special entrance (Oscar's Gas Station) 45 minutes before the show. Our dinner was at 5 and the show was at 9 so we had a little bit of time in between to do stuff. You show up to the special entrance. Show the Cast Member your slip of paper and they will allow you to walk on a path to your seats.
Once in the stadium there are no bad seats, however the Fantasmic dinner package seats are not in the dead center. As you are looking towards the stage, about 1/3 of the seats were sectioned off for the packages and they are on the right hand side. Find a seat, grab a refreshment, and just wait. The later you arrive at Oscar's Gas Station, the farther away from the center you will be seated.
So you don't have to wait hours, but to get ok seats, you can't just show up at showtime.