On approach there are three (or acctually four) scenarios.
1. No traffic ahead, the runway is free.
Landing clearance is given.
2. There is traffic ahead but it is separated and it is deemed that the runway will be free at the very latest when the arriving traffic passes the threshold.
This is when the aircraft is instructed to continue approach and it means just that, descend the ILS at approach speed and await landing clearance (if it's not given in time the captain or the ATCO can take a decision to go to the next option).
3. The runway is not free and will not be free in time for the aircraft to land.
Go around instruction is given
There is how ever a foruth option
4. The runway isn't free but during certain circumstances (defined in the MATS part 2 if I remember correctly) a "land after" procedure can be used.
In this case responsibility is transferred to the PIC of the landing aircraft and if (s)he deems it safe the aircraft can land even though the runway is still occupied.
So even though the runway is occupied the aircraft doesn't have to go around, simply because when it arrives the runway will be free (traffic ahead having vacated or departed), in these cases the instruction to continue approach is given.
Now I'm going to sleep
