Just Wondering: The Terrorist Watch Lists

There seem to be several lists, but I've been looking, since the underpants bomber lit himself on fire, for an indication of how these lists are used.

The lists should be current and focused. Further, if the people on them are seriously suspected of terrorist activities, they should be investigated. Are the lists used as a basis for investigations? If it is found that more than one person has the same name, is there an attempt made to figure out which one is suspected of terrorist activities? Are names removed when an investigation finds that that person is innocuous?