Graveyard piles are only for corpses awaiting burial or butchery. Other bodies go into the refuse pile.
Coffins and caskets are placed into a Furniture Pile when manufactured.
A coffin or casket must be installed before it allows burial. It must then be authorised for burial after being installed (this prevents an installed casket from being immediately claimed, just in case you wanted to create a noble's tomb out of the casket you just installed).
Designating a tomb is only of real value for nobles and their progeny. Otherwise the caskets will be used by any corpses awaiting burial. However, regular dwarves probably enjoy getting dedicated tombs all the same, even if it is a bit morbidly foreboding.
Dead people don't care about their surroundings, so as long as they are installed indoors, your catacombs can be as spartan or rich as desired for affectational purposes. I personally like to make a series of long tunnels lined with individual alcoves where the coffins are installed.