Phycon, are you asking about Cottonwood Lakes or Horseshoe Meadows where the road ends? Cottonwood Lakes permits can and should be reserved in advance but a good number of permits are held for same day walk-ins down at the visitor center in Lone Pine. Horseshoe Meadows area is first come first served... just park and find something, payment is self service.
Brent, I've stayed at Cottonwood Lakes Many many times, and I've never been aware of there being any system of reserving spaces. You also contradict the current posting on their website:
http://www.fs.usda.gov/recarea/inyo/recreation/camping-cabins/recarea/?recid=20692&actid=29"Located 24 miles from the town of Lone Pine, California, in the Horseshow Meadow Recreation Area. The campground has 12 walk-in sites with tent pads, shared tables, fire grates, piped water and toilet facilities.
Located near the Cottonwood Lakes/New Army Pass Trailhead, which provides access to Sequoia National Park and the Cottonwood Lakes Basin, in southern John Muir Wilderness."
I think you are talking about overnite BACKPACKING permits, which was not my interpretation of the question asked in this thread.