From what most understand, the computer matches the wait list--how often, no one seems to know for sure, but thought is once per day--and once that is done, the room is held until someone manually changes it.
Waitlists are an exact match so if someone has been waiting for a room longer than someone else, but doesn't need as many days, it would go to them.
For example, if you want 5 nights and someone waiting only needs 3, and 3 become available, they will skip you to fill the 3 night wait list. They won't hold those 3 nights for you while they wait for the other 2 since that might never happen.
With online booking, I think that rooms can get scooped up before filling wait lists because no members have access to inventory.
I have had very good luck with my wait lists, but most have been only 1 - 3 nights. I also, even when I have a wait list, stalk the website and have ended up getting what I want this way too.