The hold expires but whether they go back into inventory or not depends on how
DCL was controlling it. If they "oversold" some categories, anticipating that x% of the held reservations would end up released, not all the inventory would be returned. But chances are pretty likely that at least some of the space currently being held will go back into inventory allowing new bookings to be made. The bookings are cancelled automatically at midnight but if inventory is returned at the same time, I don't know. If I were waiting for a cabin on a hard to get cruise, I would be up at midnight checking it.
Also, even if the bookings were holding a specific cabin, I wouldn't expect a category to go from "guarantee" to being able to choose that specific cabin at midnight. I'd expect they would continue to sell it as a "guarantee". They might decide to start assigning cabins to some guarantees depending on who/how many cancelled bookings they have. I have had a guarantee assigned just a week after booking this far in advance (it was on one of the early Panama Canal cruises)