Let me demystify the "PS" situation a little further and in more detail.
Priority Seating (or PS, for short) is what it used to be called. It is now called (by Disney Dining) "Reservations." That is the new, official name for it (I can't recall when exactly DLR switched from PS to "reservation," but it was in the last 12 months, I think.
The trouble with these "reservations" is that they don't work like actual reservations work at any (non-Disney) restaurant. In other words, there are no tables being held in anyone's name or kept empty until a party arrives. It basically IS still a 'priority seating' system...that is referred to as a reservation!!
The advantage of a PS/Reservation is that you will get seated before the people who do not have a Reservation....most of the time. If you arrive at Carnation Cafe with a reservation for 4 people, for example, and there happens to be a party of only 2 people who walk up without a reservation and a table for 2 is available, then the party of 2 without the reservation will get seated before you get seated, even though you have the reservation. They basically have to fill the tables and so if they have to pull from the walk-ups without reservations to fill certain tables, they will. I have seen it happen.
But most of the time, those who have the reservations will be seated before those without them. For a place like Carnation Cafe, I strongly recommend that you make a reservation because there is limited seating available and the line of people waiting for tables builds fast. You could be waiting for 45 minutes for a table if you don't have a reservation. Also, Rainforest Cafe is a good place to make a reservation as well (they have a separate phone number for that) - they get very busy at dinner time. And ESPN Zone is another place where I would recommend a reservation/PS.
The character meals are hit or miss. It is advised that you make a reservation for them because you could be waiting a long time, but honestly, I've done the meals with reservations and without them, and we always seem to wait about 5 minutes to be seated either way.
The only restaurant in all of DLR that actually requires that you have a reservation is Blue Bayou. However, people reported that they have walked up to BB and gotten tables, but generally Blue Bayou is so busy and packed with people that they require the reservation.
You can make your reservation as early as 60 days out, but it is not necessary. It may be useful to just have that part of the planning out of the way, but if you don't make a reservation until 30 days out, or 20 days out, or 10 - it will still be fine. The dining situation is handled much more casually at DLR than it is at WDW.