Tina,
The way it works is that you apply, and you are placed on the waiting list according to your position in their over-subscription criteria (e.g. If your child is not a sibling, and they operate sibling priority, you will be below all the siblings. If distance is a criterion, and you live 320 metres away, you will be on the waiting list below a child who lives 250m away, but above the child who lives 400m away).
Your position on the waiting list is NOT dependent on when you applied - so those who applied on time but did not get places do not have priority over you UNLESS they live closer, have a sibling etc.
No new application is needed for the following year, as the school should maintain a waiting list at all times. However, some schools do wipe the list in e.g. December, and so you may need to confirm that you are still interested in a place should one come up. Discuss that with the school.
If a child leaves, and you are top of the waiting list, you will be offered the place. f a child leaves, and those above you on the waiting list are now happily placed elsewhere and decline the offer, you will get the place. If none leave, or if not enough leave to reach your place on the waiting list, you will not get a place.
Remember that even later applicants will have priority over you if e.g. they have a sibling or live closer. We were late applicants for DD after a house move. She went from 42nd to 2nd when DS started (became a sibling), was pushed down 1 when another child moved into a house just across the road from the school and applied, then got a place about a week before the end of the Summer term before she was due to start. The next child on the waiting list didn't get a place until the end of Y2, as nobody left for nearly 3 years.