I quite respect the way Ancelotti manages his team, having the first 11 squads always in the forefront and preparing other good players as alternatives too. It shows how he understands the stamina of his squad and where and when to shuffle them. He's a coach that works with much calculations and always ready to take decisions while withstanding the demands that comes with working with such a top class team which sometimes suffer player injuries and instability in the understanding of the old and new players.
Rotation is indeed needed and it has all been arranged by Ancelotti. He will play all the core players if the players are in good stamina and will also give playing minutes to substitute players when the situation supports it. Ancelotti's performance in building Real Madrid is very good because he has been able to slowly meet many successful targets, especially in the transition of old players to young ones.
Top coaches like Ancelotti certainly have had enough experience, he will know in which positions the team needs to work hard and in which positions the team can field reserve players to play from the start. Their performance in La Liga is still quite good because Real Madrid has not felt defeat. In the upcoming match where the Real Madrid squad will face Celta and I think they have a great chance to continue on the winning track.