If a waitlist comes through for you all your other waitlist dissappear, so you need to call again and move to the back of the line. Don't list something just to list it if you really don't want to stay there.
I've been told different things by different CM, but I believe you're correct. When I first wait listed, I was told that they were ordered, so if my first choice matched, then it's finished, but if my second choice matched, I would still have earlier priority on my first choice. However, if the second choice matches and wipes out the first choice, and I could miss out on my first choice if it would have matched later.
I'm facing the dilema on how much I want the first choice, and if I should delist the second choice. I'm thinking I don't want to give up the chance of getting first choice as much as a improving odds getting a second choice. Guess it depends on whether 1st and 2nd choice are close or wide apart versus 2nd choice and default.
So the corollary is don't list something you DO want, even though you want it, if you really want a chance at your top choices.
Example: You've got reservations at SSR and would prefer to be at AKV or BWV/BCV. You really want to be at an Epcot resort in October and only find AKV a small improvement over SSR. You've been on the wait list for 3 months and if you match at AKV, your chance of matching BWV/BCV just went down. Even though you would prefer AKV over what you got, eliminating AKV improves your chances at BWV/BCV (how much is unknown). Note, listing two or more choices that you do want more or less equally isn't a problem.
Preference: SSR < AKV << BCV < BWV