reset= combar or target or both?

[Ualaa]

If i was to replace flame shock with reset=target the macro would start over (as it's in the first line) and try to cast flameshock, and then proceed where it was with lava burst, if all are on cooldown it just casts light bolt. Is that correct? I.e. reset=target in 1 castsequence does not affect the 'loop' of other castsequences?

Unfortunately, it is not correct.
Flame Shock (or any shock) can only be used once every 6 seconds, unless you talent it.

If you were to switch to a new target, immediately after having cast a Flame Shock on the initial target.
And you had reset=target (or reset=target/combat, which resets on either condition)...
Then Flame Shock is the next spell to cast, but is on cooldown.
So the entire macro locks up, until you can cast it.
Meaning, no matter how you spam the macro, nothing is cast until the Flame Shock comes off of cooldown.