Waivers
All players dropped from a team's roster are immediately placed on waivers. During this waiver period—two days in Public Leagues and anywhere from zero to seven days in Custom Leagues—anyone in the league can claim the player.
So, if a player in a Public League is dropped on a Wednesday afternoon, all managers can claim him until Friday at 11:59 p.m. PT. The player is then assigned to their new team roughly 4-8 hours after the claim deadline.
To find the length of the waiver period in your league, check the League Settings page, which can be found via a link on your League Overview page.
If more than one team claims the same player, the team that is highest on the Waiver Priority List is given the rights to the player. The priority list is initially set based on the reverse of the draft order. However, each time you add a waived player to your roster, you are pushed to the back of the list. This "rolling" list stays in effect for the entire season.
To find your current position in the waiver priority list, go to the Managers List via your League Overview page.
If nobody claims a player during the waiver period, he becomes a free agent. In a Private League with no waiver period, all dropped players automatically become free agents.
If you release a player from your team, they are automatically placed on waivers, and you cannot reclaim that player until after the waiver period has expired.
If you have selected a player to be dropped as a result of a successful waiver claim and decide you no longer wish to complete this transaction, you can cancel it—provided it has not yet been processed—by viewing it from your team page and clicking the "Cancel" button.
If you place a claim on more than one waived player at a time, each pending transaction appears on your Team Page along with its current position in your waiver order. All new claims get appended to the end of the list, but you can alter this priority by viewing each pending claim and changing its priority in the box provided.
Free Agents
All unowned players who have cleared waivers are free agents and are available on a first-come, first-serve basis. You can pick up or drop by clicking the "Pick Up Player" or "Drop Player" links located near the top of your Team Page. All claimed players are immediately added to your bench. It is up to you to move them to starting positions.
You can drop players without replacing them, but you can only pick up players without dropping anyone if you have less than the maximum number of players on your roster. You are never allowed to exceed your league's roster limit.
Before the start of the season, all undrafted players are placed on waivers with those left unclaimed then being treated as free agents. You can find out the length of the waiver period for your league by clicking the "League Settings" link on your league home page.