I'm very much in the "it'll stop people travelling by rail camp".
Pre-Pandemic, I commuted on the East Coast Mainline, Durham to Newcastle. There are no 'local' services on the stretch between Dunbar and Morpeth and again between Newcastle and York. I have to decide whether or not to return to commuting - I could continue to work from home maybe 60-70% of the time if I wish. If LNER go reservation only, it would be a cross against returning to the regular commute; if other one of the long-distance operators went for that (most likely CrossCountry) then it would basically be enough to stop me. I'm sure it would be a push for other commuters in the region.
I also wonder what happens in the region on a busy Saturday. Newcastle are playing at home, the tweens are all travelling to the Metrocentre, daytrippers are travelling in and out of York.... many of these people are likely to be barely aware of which train company is which, never-mind that they're meant to reserve a space on some of them. I don't see it happening that if there's a 20 minute gap between services, that these users are going to hold off from travelling on the first train that pulls in. And sure some will book but others won't/reservations will be full. And then what happens? Any attempt to enforce this will be difficult, and will put people off rail travel.
What about the Aberdeen-Leeds evening service which is the last southbound train through Newcastle, Durham, Darlington and York? Are people sat having a drink going to make a reservation for this? Is someone going to miss an encore at a gig, the end of a show at a theatre, because they have to get the earlier train? Will staff working late find they can't book a reservation when there's a Newcastle match on, or during York races? Again, any attempt at enforcement will lead people to make different travel plans.
Then there's the question of cost/value. People are willing to pay for 'open' Anytime or Off-Peak tickets because it gives them flexibility. You're paying to be able to choose any train, to take the next one without question if there are delays, to decide to have an extra pint, a dessert at restaurant, another quarter of an hour at the park, without having to make changes to your booking. Will LNER cut the cost of fairs now that the ticket has lost that flexibility? Why should I pay the same for a product which no longer entitles me to the same level of service?
It might be that LNER identify some peak-time services to make reservation only: the Edinburgh-Newcastle-York-London only services which are looking to compete directly with air travel, for example. And maybe even some of the peak-time into London and out of London stoppers as well. I can see that this might attract some business without denting their other markets. But I can only see a reservations only policy denting the local commuter/leisure market - and destroying it if CrossCountry were to follow suit.
Tldr; Compulsory reservations will significantly cut the commuter and leisure market in the North-East. I'm sure there'd be other regions where the outcome would be similar.