There isn't any "notification" function in the software for that. Potentially you could create a script to be called from an Event action (Reservation canceled) -- it would have to look through all reservations to see if there's a wait-listed reservation for the appropriate dates. However what we normally recommend is that you just check the "Non-reserved" tab for waiting-list reservations on those dates any time you cancel someone.
Also note that if your waiting-list reservations to NOT have a site assigned yet, then they will show on the Rack on any empty cells (as "No Site:#") if you have the options selected on the Rack Options (Show Unassigned reservation counts and Include Waiting List reservations). In that case when you cancel someone and they disappear from the Rack you could see that there is someone waiting for a site on those dates.
http://campgroundmaster.com/help/rackoptions.html
Stan Spielbusch
[Forum Administrator]