http://www.youtube.com/watch?v=UrMehh3pOOQ
This would be a good video to watch for Mario specific WDOOS punish stuff. It's against Samus, and primarily her F-Smash. Otherwise, Hugs plays a very aggressively-passive game of constantly pressuring from a distance. WDOOS is then used to avoid an attempt by moving away, and punishing it accordingly. This can mean either directly hitting the opponent when they miss the attack, or dashing towards > dashing away again/shielding/stalling/whatever, with the means of waiting for their reaction to missing their attack, and punishing THAT.
Against a Falcon for example, it plays out with the same concept, but can be applied differently due to the match-up. If you shield a Knee, and the Falcon is catching on to you WDOOSing a lot, and knows it's a good option from there if he spaced it in a way that you can't connect an aerial OOS etc, he may go for another aerial either in front or behind you (wherever he expects you to WD to), and you have to predict accordingly, or even just wait in your shield for a moment to wait for the SH so you know where it's safe to go, or WD on the spot and Grab him on his whiffed aerial wherever he may be landing.
I saw you post in the Bowser is OP thread, watch M2K's Shiek vs both Fox and Bowser and his application of WDOOS. It makes it VERY dangerous for Fox to attack in any form, while being in danger to a quick Dash Attack/Grab/Needles at that distance. If Fox doesn't Dash-Grab the appropriate, tedious distance, either predicting the Dash Forward > Shield or the WDOOS Backward that follows, he could get punished HARD for it. If Bowser attempts closing the gap, he has to commit a LOT due to his lack of speed, and in this case the WDOOS is simply a bait to force Bowser to commit while still being a threat from a baiting-falsely-defensive position.
Hope that helps!