The little holes are what let the fluid back into the reservoir when the pedal is released.
When the piston fails to fully return, the little hole remains covered, and the line remains pressurized, the brakes don't release, the fluid heats up, applying the brakes even harder.
The bigger hole is where the fluid gets from the reservoir into the cylinder, ready to send to the wheel cylinder when the pedal is pressed.
When installing a new/rebuilt/empty master cylinder, it's always best to "bench bleed" the cylinder. Fill it with fluid, hold your fingers over the line ports, push the piston in using your fingers as check valves to expel air and draw fluid in. Keep pumping and watching for bubbles coming in the reservoir and air coming out the ports. When it is free of air, install it quickly so it doesn't leak down or get air in the cylinder.
That way you don't pump air in the system, usually can just bleed it at the lines.
Good that you got it going! I suspect it will be good to go now.
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