The longer version
A waitlist captures demand the schedule cannot meet right now. When a class or open-play session is full, players join the list instead of leaving. When someone cancels, the first person on the list is told and given a short window to claim the spot.
Clubs care because a cancellation at 16:00 for a 19:00 session is otherwise lost revenue and an empty spot in a full room. A working waitlist refills many of those, and it shows the club which sessions deserve a second slot.
Waitlists fail when the notification goes to everyone at once, or when the claim window is so long that the spot goes unfilled anyway. Offer in order, give each person a short window, and move on.