According to this article:
/proc/sys/vm/min_free_kbytes: This controls the amount of memory that is kept free for use by special reserves including “atom
All linux systems will attempt to make use of all physical memory available to the system, often through the creation of a filesystem buffer cache, which put simply is an I/O buffer to help improve system performance. Technically this memory is not in use, even though it is allocated for caching.
"wait for reclaim", in your question, refers to the process of reclaiming that cache memory that is "not in use" so that it can be allocated to a process. This is supposed to be transparent but in the real world there are many processes that do not wait for this memory to become available. Java is a good example, especially where a large minimum heap size has been set. The process tries to allocate the memory and if it is not instantly available in one large contiguous (atomic?) chunk, the process dies.
Reserving a certain amount of memory with min_free_kbytes
allows this memory to be instantly available and reduces the memory pressure when new processes need to start, run and finish while there is a high memory load and a full buffer cache.
4MB does seem rather low because if the buffer cache is full, any process that wants an immediate allocation of more than 4MB will likely fail. The setting is very tunable and system-specific, but if you have a few GB of memory available it can't hurt to bump up the reserve memory to 128MB. I'm not sure what effect it will have on shell interactivity, but likely positive.