Hey Sujay,
When an event is set to Waitlisted, you can configure that waitlisted contacts be moved automatically to event registrations when space becomes available. For example, if your event capacity is increased (you pick a larger venue, or simply add more chairs) or someone already registered cancels and a spot becomes available, the top waitlisted item will move automatically to the registration.
You will find this option when you set the "Waitlist this event" toggle to "Yes", and the "Waitlist" section becomes visible. It is the "Automatically register waitlisted contacts" and is set to YES by default.
Regards,
Shravan