When setting up a registration within your event and on the Event Registration tab, you have the option to allow for a waiting list by checking the following setting (see below).
To cap the number of registrants, be sure to enter the "Available Quantity". Once this number has been reached and your registration shows as full, all other registrants can opt to register to the waiting list.
If a registrant is removed from the registration, all on list are notified by email simultaneously every time a ticket becomes available. This is what the email looks like (see below).
The registrant on the waiting list can then click "Get Ticket" to register for the event.