I was at Madeira yesterday and this was happening.
we were on the 1400 BA flight and were sat at the gate for 3 hours watching various planes trying to land
our inbound flight circled for ages, then diverted to Port Santo
they then had another go and landed, did a quick turnaround and got us home thank goodness
it was low cloud cover - at Madeira is sits really low and they cant land when they cant see the runway apparently
but its really changeable - every now and then there is a clearing and 15 minutes or so when some flights can get in
everybody cheered every time a plane landed
the crew said apparently at Madeira when it goes into that holding pattern you only get 2 chances to land - then you have to divert if you have enough fuel
BA and the staff were great. Madeira airport dreadful - they knew it was happening but herded everybody to the gate where we all sat for three hours.