Reserve ... Tunnel Mountain has at least 3 separate campgrounds, but, as the link noted, some areas may be closed due to repair work. Also, close to Canmore, flooding occurred so if staying in this area, reserving is probably wise too.
From Tunnel Mountain campgrounds, there's easy access to Banff itself, the gondola (excellent views on sunny days) and the National Park Building has the best photo-op of the main street in Banff. Also, a nice easy walk along the river to a waterfall.
If in Banff, I'd also recommend spending an extra day to do the drive up to Jasper and back - it's very scenic with stops at Lake Louise and the Columbia Ice Fields. Or spend a night or two at one of the campgrounds near Jasper, then start heading back.
Here's what happens when you don't reserve ... they send you to the overflow location. Actually, the scenery is outstanding, isn't it??
the above photo is the Jasper overflow, but the Banff one is just as scenic but not as close to Banff and no services compared to Tunnel Mountain.