It is an area for booking where the rooms cannot fit into the room type that was booked. The reception will have to move other reservations on the calendar around to be able to fit a reservation to the calendar.
Holding area does block availability of the room type it is booked in.
Holding area does not block other room types.
This means that in the matter of the property being fully booked, overbooked in standard rooms but have 1 superior rooms left, the superior room would still be available online until the reservation on the holding area has been moved from standard room to superior room.

How do I rearrange reservations on the calendar

In order to rearrange your rooms you need to move reservations to room numbers that are free. Sometimes you will need to move them to the holing area while you are rearranging your rooms. 
Right click on the reservation you would like to move, hover over "Quick move" and select the new room number or the holding area. 
Note: all the rooms that are above the line Other Rooms are the same room type as the reservation is in, everything under that line is a different room type.

Why does a reservation drop to the holding area?

• For example, this booking was placed in the Holding Area. The guest booked a Double room for 3 nights.

• In the system, the double room is available for 3 nights but not in the same room for the entire stay, this is when a reservation will drop down to the holding area.

• Reception therefore has to move the booking room 8 at the middle level to room 4 instead.

• Then the bookings that are in the Holding Area can be moved up to room 8 for all three nights.