In my experience, the seat blocking is temporary until check in opens for the flight at T-30 hours. I experienced myself more than once that e.g. a 5 row Business at the time of booking on an Embraer Jet (with the adjacent seat blocked initially) shrank to 2 or 3 rows depending on the load in Business at the time of check in. And of course the blocked seat was gone and we all got very cozy in Business.

The problem here is not the system (LH is capable of doing this for decades, San Gottardo mentioned this already), but the utter greediness of AFKL to make an already inferior short haul Business product even worse on the KLC/HOP fleet by selling every seat even in Business on the Embraer fleet., unlike their competition in Europe, where most airlines only sell 1 out of two seats in Business on the Embraer fleet.

I do not like to play lottery on flights that are costing 1000+ return within Europe and therefore avoid KLC and HOP like the plague