It's not retarded. I have played in several leagues that do not use free agents. Any player not on a roster is on waivers and stays there. In league's that use daily roster changes it alleviates some problems running a league this way.
If I remember correctly you can set it up like this when you're first creating the league but I don't think you can change it now.
Maine has a good swing for a pitcher but on anything that moves, he has no chance. And if it's a fastball, it has to be up in the zone. Basically, the pitcher has to hit his bat. - Mike Pelfrey