DHCP reservation is a feature in the DHCP server that allows the DHCP administrators to reserve one or more IP addresses for particular mission-critical computers only. In order to configure DHCP reservation, the administrators are required to know the physical addresses a.k.a. MAC addresses of the target computers for which the particular IP addresses are to be reserved. Once the MAC addresses are known, the administrators can then reserve the appropriate IP addresses by mapping them with the MAC addresses.
For example, if computer A is playing the role of a print server, and has MAC address of 00:A1:FB:12:45:4C and you want that the computer should always get 192.168.0.7 as its IP address, you can map the MAC address of the computer A with the IP address to configure reservation.
When an IP address is reserved for a particular computer, the IP address remains in the DHCP address pool, even if it is the only address available for the assignment and any other client computer is requesting for the address. The reserved IP address will only be assigned to the computer whose MAC address is used to map with it. In this example, as soon as the print server boots up and requests for a dynamic IP address from the DHCP server, the DHCP server assigns the 192.168.0.7 IP address to the server as configured.
DHCP exclusion, on the other hand, is a configuration in the DHCP server using which you, as a DHCP administrator, exclude a single IP address or a range of IP addresses from being assigned automatically to the DHCP client computers.
DHCP exclusion range is specified while configuring the DHCP server if you have assigned a few static IP addresses to the mission-critical computers in order to avoid latency in the network.
For example, if you have assigned the IP addresses from 192.168.0.2 to 192.168.0.5 to the DNS server, DHCP server, Active Directory domain controller, and the WDS server respectively, you must exclude the said IP addresses from the DHCP address pool.
When an IP address or range of IP addresses is excluded from the DHCP server, the excluded IP addresses are never assigned automatically to the requesting DHCP client computers whatsoever.