When you go to the IRCTC login page to search for train seat availability, you can see that certain trains show WL written against ticket availability. It means that the seats are already booked and further bookings will go into a waiting list.
It is common to book tickets even if there is a waiting list. Most often, a waiting list of less than 100 has chances of confirmed tickets later on, especially during early booking. During booking, you may see the RQWL displayed, depending on your choice of station.
You are free to try your luck at this point and book the ticket. The booking process is the same as any other ticket booking. At the same time, chances are less with this type of ticket especially if the general waiting list is long.
Once you booked, you may see the RQWL status in your ticket. You can regularly check your PNR status to see if your ticket has moved up the list or not.
In case the ticket is not confirmed even after the IRCTC chart preparation, the online tickets will be automatically cancelled. Such auto cancellation when the ticket is on the waiting list will get you a full refund without any of the IRCTC cancellation charges.