Dining package seating is in the two middle sections of the theater, so prime viewing! They fill the rows from the bottom up, first come, first seated. At some point before Fantasmic begins (10 minutes? 15? I can't remember) they do let guests into any remaining seats in those sections, so you shouldn't show up at exactly show time and expect to benefit from having the dining package.
When you book the dining package, you'll be offered a choice of dining times. Usually those times are earlier (i.e. lunch or very early dinner) so that you have plenty of time to finish eating before you need to go to the theater.