Ok, I talked with Judy at the IAVC (visitor center in Lone Pine). As people with reservations come in and pick up their permits for the following day, if they release any reserved but unused slots, THOSE slots become available at 11 AM and after.
During the day as more people trickle in to pick up there permits for which they have reservations for the next day, as unused slots are released, they also become immediately available (if it is after 11 AM).
No-shows for the next day (reservations where nobody comes in at all, and they have not called the IAVC to say they are coming) are made available at 2 PM.
So bottom line: Go in no earlier than 11. You should be able to pick up a permit for the next day after that. If there are none available, hang around, and you will probably get one.
I also learned that July 4 was the first day this year that ALL the day hike slots were filled.