I think it depends upon the time of year.
We were at WDW last week, and arrived at Fantasmic about 30 minutes before the show. We got seats in one of the 3-4 sections right around the middle of the stage. The dinner package reserved section is all the way to the right of the stage. By the time the show had started, the TWO sections all the way to the left of the stage were completely empty.
I won't offer a judgement on the quality of the seats because some people are just as satisified being on an end as they are being in the middle. But from my off-season visit experiences, there's really no need for the dinner package. Those who arrived 5 mins before the show had just as good or better seats in the stadium.
If you're visiting during a busier time of year, the dinner package will guarantee you a seat, albeit perhaps not an ideal seating location. If you want a "better" seat, you still need to arrive with the general public.
Incidentally, we ate at Hollywood and Vine our Fantasmic night and the food was wonderful. Best combination of selection and quality we had during our stay.