Here are the two key points we can derive from it all:
First, Cottam's going to be out for the 2010 season. I don't know the details of his neck injury but, whatever it is, it's going to keep him out for a while.
Second, the Chiefs want to keep Cottam in 2010 and (potentially) beyond.
So, while they did waive him on Wednesday, it was designated as waived/injured. Since Cottam is not a vested veteran -- you need four years of service for that -- he has to pass through waivers meaning all 31 other teams would get the opportunity to sign him.
(Side note: If you're not a vested veteran, like Cottam, then you have to go through the waiver process like this, according to NFL rules. Previously, teams could "stash" younger players on IR who weren't quite ready yet. The Bobby Beathard-led Redskins teams back in the day were well known for "stashing" a young quarterback on IR while they waited for him to develop.)
As of this moment, Cottam is available to the other teams. Of course, the 31 other teams are armed with limited information on him and only know he ended the season with a neck injury and won't be ready for a while so they'll more than likely be hesitant to sign him off the waiver wire in 24 hours. Still, though, the Chiefs are taking a risk, as small as it may be, by making him available.
Once he (presumably) clears waivers this afternoon, his rights will revert back to the Chiefs and be placed on injured reserve.
Going through this process, assuming he clears waivers, allows a couple of things to happen. First, the Chiefs can retain his rights. That's the important thing here and something they clearly wanted to happen. Second, he would not count against the 80-man roster (there are some tricky rules rules about the number of players actually under contract even when you go through camp cutdown process). This is also very important to someone like Todd Haley who has practices to conduct and needs all the roster spots he can get.
From a business standpoint, the outcome is the same to Cottam. Either someone claims him (and his contract) off waivers or he (and his contract) return to the Chiefs.
Bottomline? If Cottam clears waivers this afternoon, he'll remain a Chief.