Tell me again how this happens...I can't seem to explain it to myself. 

I was offered a w/l book on 8/5, accepted and it was to be mailed by 8/10.  It canceled last night because the sender never marked it mailed.  I was put back on the w/l, but now I'm #2 instead of #1. 

My guess is that while you were waiting for the response that someone who was ahead of you either (1) returned from vacation and took an account off hold or (2) the person ahead of you was waiting for the book and it went lost and was returned to the front of the line or (3) the WL book was RWAP by the other member and was returned to the front of the line by request to TPTB.

If the member added the book to the WL ahead of you, that person will be in line ahead of you if returned to the WL line due to one of these factors.

also if the person in front of you had RC that were turned down by the person that was supposed to send you this book.

they might have mailed it but forgot to mark it mailed.  you could PM them and ask

I feel better now that I know there's a few plausible explanations!