Welcome to European vacation regulations :-).
You are entitled to X days of vacations per year. Literally. There's no hook to it. You simply ask the employer, basically your direct supervisor (head of the group, department, dean?), and if there's no reason to say "no", they will approve it. Of course taking time off during days when you are teaching needs to be explained very very well, but if your vacation days do not interfere with teaching obligations, or similar duties, you will be given the time off. That's it.
Normally at universities, unless you have a very fussy boss, nobody cares when you take vacations time (still recall non-interference with teaching), but most people take several weeks off in the summer and people with a family also during school vacation periods (country dependent). In companies, the system tends to be stricter, you should plan any longer breaks several months ahead and coordinate with your colleagues so that it does not happen that everybody leaves for two weeks and a company stops. At universities that is a non-issue, though.
Legal vacation time means you are entitled to that time. The employer is obliged to give you that time off. Suppose they will refuse to approve your vacations when you wish to take them (e.g., when you work in agricultural sector you shouldn't leave at the harvest time). In that (rare!) case, they will have to select and offer you another period of (usually at least two weeks of uninterrupted) vacations period some other time in the year.
But there is another potential surprise for you. If you won't take all your vacations in a year, since you are entitled to that time, it will be (in all countries and places I worked, but there might be local differences) shifted into the next year when you will be entitled to the standard X days per year according to the union negotiations PLUS whatever carry-over from the last year. The regulations regarding how far into the future that contingent of vacation days can be pushed differ, but normally the carry-over is useful in the very next year in full. Sometimes you might even be obliged to take it. Because if not, the employer might have a problem - again, you are entitled to vacations. And the employer can even force you take time off in order to use that vacations budget. The reason is that they don't like the idea of accumulating and then even making use of several months of vacations in a row.
As for being in the workplace during working hours, again, regulations differ but most of the time there is at least a certain period (10oo-15oo?) when you are obliged to be there. But in reality at universities I never heard of anybody making any fuss about this (except for Eastern European universities, where it can be a matter of local department politics - but that is of no concern to your case). Think about it as a legal issue. If something happens to you at office hours (a car accident), it might be considered a work-related accident, so the employers try to counter-act that by requiring you to be in the office unless allowed not to.
What does vacations mean when I will likely be spending whatever free time, rushing to finish my manuscript, grant proposals, or course prep anyways?
You structure your time. It doesn't have to be the way you describe. What use does an employer have of burned out and stressed out employees?
Even later edit:
Just for completeness, being entitled to take vacations also means that often you will be able to trade days off for salary. Usually the union contracts regulate, or prevent this, but for example when you are leaving, the employer will either compensate the unused fraction of the annual vacations budget by money, or will force you to take it right before leaving the position - during that time you will receive the regular salary up to the date of leave.