To add some more weight to Globaliser's point about waitlists being practical:
In my experience a reasonably high proportion of people who are added to the waitlist get confirmed (well over half). Of the people who get confirmed the majority (well over three quarters) go on to either cancel this booking or noshow. The result is to tie up inventory needlessly. There is a much better chance of the seat actually being used simply by offering it in open availability rather than confirming people from waitlists.
At the airport processing waitlists is also time consuming and, if you've seen it in practice at many airports around the world, you'll no doubt agree it can be a complete uncontrolled scrum!