Hold on - I don't think we should be too harsh on this question.
I don't read the OP as asking "Why do airlines overbook?"
The way I read it, I think the question is "In order to manage the problem that currently leads to airlines overbooking, wouldn't it be better to use the tool of a waitlist rather than the overbooking tool?" And I think that this is a question worth discussing.
FWIW, I think that the answers to this are both commercial and practical.
Take a passenger who books (and now gets a confirmed reservation) at a time when his flight is already overbooked. The way things work, he is almost certain to get away on his flight as booked, as will everyone else who actually turns up for the flight. It makes no difference to him or to any of his fellow passengers whether his confirmed reservation was originally an overbooking or not.
The commercial side is this: If the airline offers him a confirmed reservation, he is commercially captured. If the airline can only offer him a waitlist, he will be casting around looking for an alternative carrier that can offer him a confirmed reservation. Although there would be no practical difference between a confirmed reservation and a waitlist with the original carrier, the original carrier is more likely to lose him as a customer if it only offers a waitlist. So confirming the reservation makes more commercial sense, and the passenger will almost certainly fly as booked.
There is also a practical side: If the airline merely waitlists, when it becomes able to confirm the reservation it will have to contact the passenger to notify that, and then find out whether the passenger still wants the reservation confirmed. This is what airlines already do when they waitlist. The administrative burden would be hugely increased if no overbookings could be taken, thus pushing up costs for everyone. Further, it is doubtful that all waitlists would still want to fly, so the relationship between the expressions of interest in a flight (confirmed reservations + waitlists) and the number of bottoms in seats when the flight departs would become even more volatile than it now is.
Contrast the current practical situation: The airline holds x number of confirmed reservations. Those who cancel will contact the airline to cancel. Those who no-show will be detected at the airport. Those who want to fly will turn up and check-in. This is much simpler - especially when virtually everyone gets to fly as booked.
BTW: I was once on a flight which was overbooked by well over 100 in economy alone (I know someone at this airline who has access to the figures). This was common at that airline for that route. On the actual flight, it was only about 90% full in economy and I had an empty seat next to me. That's how bad the situation can be.