I'll sit with the tab up til "Tank in need" pops.
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The other night, I saw DPS as needed, so I queued as a tank as I normally do because I'm working on getting the mounts and it popped instantly.
It seems that it might be actually be based not on the average time but the wait time of the person who is currently at the front of the queue.
In any case, I'm a situation where you need several people of the same role, the people who queued earlier have been waiting longer. If you sign up for an alliance raid as DPS #14, it could be perfectly accurate that the average of everyone else's wait time has been ten minutes - but it will only take one more person for your personal wait to be over.
Or to put it another way, the average is going to be a mix of people who waited for ages and that one lucky person who got an instant queue.
You have to remember that the AIN and average wait time are calculated across the entire roulette, not just the duties that you yourself have access to. There could be a higher level dungeon that's been waiting for a tank for twenty minutes, while all the duties that you have access to already have tanks on deck.
Basically it lags behind what's going on in real time. You can use this to your advantage sometimes. Also what others have said with the DF being across all duties for all levels and such.
This sums up my observations perfectly. Out of curiosity I've left the duty finder open to see how often it updates the window and it's seconds rather than minutes. Not sure the exact amount of seconds, could be 30 or more. Matching thousands of people, taking into account their personal limitations of what they have unlocked, their jobs, their place in the queue together with individual requests for specific dungeons, is extremely complicated and I believe the duty finder works really well for what it needs to do. The OP assessment that it's wrong is incorrect.