Not sure if it still works this way but....
Couple years ago yahoo would process the waivers a few hours before the results. You could basically sit up and wait, and in the wee hours of the morning you would see the unclaimed players become FA while the claimed players would still be on the wire but with the WW instead of FA designation. Then after an hour or so the system would make the roster changes needed.
My guess is the system had already figured out who got who, but hadn't actually made the changes yet. If it makes you feel any better, in that situation, you were likely outbid and that's why it let you cancel in the first place.
Post # 103 above explains it best I think.