'Best fit' doesn’t necessarily mean the same thing as 'selective'. It can mean different things in different situations and settings. There in no single, universal model.
It can mean they aim to initially fill vacancies within particular age ranges, in order to maintain balance across the setting, or to avoid constantly having to redeploy staff between rooms.
They may be trying to maintain a stable ratio of funded and full-fee-paying clients. "Free" Childcare, on average, loses a nursery £1000 per child per annum: so childcare providers can’t afford a preponderance of funded children.
Most commonly, 'best fit' means trying to fill vacancies on a like for like basis in terms of the sessions booked. Example: let’s say a full time place becomes available, but Family Number One on the waiting list wants just three days a week. There’s every likelihood the nursery will skip Family Number One and offer the place to a family that wants only three days. This may seem unfair, but the alternative is that nursery places would, over time, fragment into lots of part-time slots that become increasingly difficult to fill. Nurseries would lose money, or be obliged to increase their fees to make up the losses. So the net result for parents would be higher childcare costs and non-availability of full-time care opportunities.
In all honesty, I’d be surprised if even those nurseries that say it’s 'first come, first served' weren’t using this latter best-fit model to some degree.