I say it is busy, 11 cities in a month, but it is about 2 days per city and one to travel to the next.
(Yes, you will need most of a day for a 5 hour travel.)
In your case I would skip a few cities and replace them by countryside or beach locations, to bring in more variation. But as such lists go, it is not bad.
If you insist on seeing all cities and travel in summer, you should book all ahead, hostels and trains.
On the other hand, InterRail allows for flexibility and change of plans, if you want to make use of that, do not book ahead and learn to live with forced change of plans if trains are fully booked and hostels are out of beds.
When I was InterRailling in the past I would phone ahead in the evening for a bed the next night. These days you can book online for one to three days ahead.
When you arrive in a city, get your reservation (if needed) for the train to your next destination, book your next hostel and then start enjoying your current stay.
If you are happy with trains that do not need reservations, you do not even need to do that and just book your next hostel or book a series on basis of being able to cancel if needed.
For your hostels, I have not been in most of your destinations and when I was I did not stay in hostels.
You best use a hostel (or hotel) booking site, read the reviews on the site and do double check by just googling the name and town of the hostel and review.
I have learned to trust Booking.com. But read the reviews, see what is right or wrong with it in the view of the reviewers. (For example, the last time I reviewed a hostel, I was using a double room, you are more likely to use a bed in a dorm, so my review might miss the points you need to see.)