The beach/pool towels will be in your room shortly after you're on board. We had ours by the first evening. You can take these towels with you to the pool, or "sign out" a number of towels at the counter. You must provide your S&S card, as well as your cabin #, and you'll be given a receipt. Upon the return of the signed out # of towels, your receipt will be marked "VOID" and you will not be charged ($22 per towel).
If you've used the towels left in your room, just leave them on the floor of your room and clean, dry towels will be provided for the following day.
These towels are large, beach towels, which cover most of the lounge chair's surface. People use towels for deck chair saving, taking a chance of them "walking away". As previous poster mentioned, you will be charged for missing towels. If you're going to save a chair on the deck, take along a dirty t-shirt to stretch over the back of the lounge. Works out well...and believe me, by 8 a.m. there are very few deck chairs available on sea days.