If at check-in the only seats available cost extra, then you will either get one of those at no charge or the airline will shuffle people around (possibly "upgrading" someone with status) and then put you into their seat.

The airline may also offer people checking-in an opportunity to upgrade at a reduced cost, which would also open up other seats.

If you do not want to pay the fee, don't do it. You will get a seat and it may or may not be one of the seats that they were earlier trying to charge for.

On a different note, the same thing often happens with rental cars "Oh, Mr. djs, we can upgrade you to a sweet Lincoln instead of the Corolla you reserved for just $15 more per day" when I decline they give it to me anyway because they were out of Corollas.