Reserves are mostly short-dated government securities and deposits in major currencies, plus gold and IMF positions. They are the ammunition behind central-bank-intervention and the reason a currency-peg is credible or not.
Monthly reserve data is read for two things: whether the authorities have been selling, which points to intervention, and how much cover remains. Analysts compare reserves with months of imports and with short-term external debt falling due within a year, since that is what a sudden stop would demand.
Very large holders such as China and Japan run reserves in the trillions and low hundreds of billions of dollars respectively, which changes the calculation entirely: their constraint is political and economic, not arithmetic.
Example: reserves of $60bn against $45bn of short-term external debt and $5bn of monthly imports gives twelve months of import cover and a coverage ratio of 1.33, which markets would treat as adequate but not comfortable.
Related: central-bank-intervention, currency-peg, balance-of-payments, capital-account