Directly from the FAQ:
Waze respects your privacy and will never share your location against your will. However, being a social application that endorses sharing between its community members, there are several ways for you to share details with other members of the community.
By default, your privacy settings are set to show you as anonymous to other wazers. If you send reports, those are sent with your nick name, if you chose to have one. If not, they are sent out anonymously, as well.
You can choose to be displayed by your nickname on the map; this means other wazers will see you with the nick name that you chose.
On the other hand, you can choose to become a 'ghost' which means you will not be displayed at all to other wazers.
At any scenario, other users cannot 'look you up' by your user name, nick name, or any other identifier.
Ariesboy,
I don't think that post really answers this question. I was just confused that the person who I came across, whomever it was shown on the map, wasn't moving at all. It seems rather odd that you would show a Wazer existing in a location where they really don't exist at all to presumably to try keep that user's anonymity.
My situation perhaps is a very in-frequent occurrence, though I think this is the 2nd time since I started using Waze a couple weeks ago, but it kind of threw me off.
If you have the ability to remain anonymous and its your choice then what is wrong with displaying those who choose to share where they are on the live map or the client? All-in-all I just thought it would be neat to see another Wazer helping out the Waze community...