Hi JoAnn,
You've got it absolutely right!
One of the main advantages of the Disney Dining Plan is that reservations that would otherwise require pre-payment will not require pre-payment for Guests wishing to use their dining plan.
When making your dining reservations at restaurants normally requiring pre-payment, you will need to click on where it says "I want to use my dining plan to book reservations" which you can see at the bottom of the blue box
HERE.
You will then be asked to provide your confirmation number, last name and arrival date which will associate your dining plan to your dining reservations. You will then be able to make your reservations without having to pre-pay.
Please note that you will still be required to enter your credit card details in order to guarantee the dining reservation but, your credit card will not be charged unless you fail to show and do not cancel your reservation in which case a penalty would be charged.
Wishing you a magical trip filled with memories which will last a lifetime!