I believe there are two different versions of waitlists - one which expires 30 days prior to arrival, and the other which expires 7 days prior to arrival. The CM at MS sets up the waitlist for you as either 30 or 7 days.
In the scenario where you are waitlisted for accommodations which cost more points than your current booking, either the 30 or 7 day waitlist works fine.
However, in the scenario where you are waitlisted for accommodations which cost less than your current booking, I believe only the 30 day waitlist would result in no penalty - if you had a 7 day waitlist satisfied in this scenario, the difference in points would go to "holding" and could only be used for a future booking 60 or less days in advance of arrival (no banking). It is certainly possible that MS would not allow 7 day waitlists for cheaper accomodations for this very reason - I've never tried.
At least that's the way I think it works.....