I certainly would not be moving out of a seat if no reservation lights were showing.I was on a train from Edinburgh recently. Seat reservations not working but everyone told to sit in booked seats. Lots of aggro at every stop with people being evicted. If nothing else, this shows that there are still plenty of walk up passengers.
GWR seem to manage much better. The reservations usually work and, if they don't, people can sit anywhere.
No reservation lights to me means sit anywhere