please empty your brain below

Those passengers you observed not touching in are not necessarily freeloaders. The 507 and 521 both serve London rail termini, so many of those boarding will have Travelcards added on to paper season tickets from outside London. These do not need to be touched in.

When the service was run by bendies, there were three queues at Waterloo - and even so, the queues were often growing faster than the buses could swallow them up
At least from today the link between London Bridge and City Thameslink is officially restored, although the full timetable is delayed.
I used to take this bus route in the 70s from London Bridge to Holborn. It was the 501 then. The journey took 15 minutes at 7:30am. There was another bus via Fleet Street - the 513.
Why would anyone with a period ticket (travelcard) on Oyster bother to touch in?
As the holder of a period ticket (travelcard) on Oyster, I always touch in when boarding a bus. I thought that was the rules.
I used to work in Bush House and remember the switchover from the old Red Arrow buses to the bendys. They were monsters, perfect at sucking passengers up and getting them off again. Along with the 507, the 521 was the perfect route for them. Maybe one day they will return.
Re "Why would anyone with a period ticket (travelcard) on Oyster bother to touch in?"
Touching in and out give usage information.

As I said to a friend in a different context:
"If you don't touch out at New Eltham after your evening out, you may find that the late evening service is reduced and you can't get home late any more."

So for the 521, touching in and out (even if you don't "need" to) shows how many passengers use the bus for each stage of the journey and hence how many vehicles are needed, the impact of any changes to the route, etc.
I was a daily user of the 521 (and its now defunct older sibling, the 501) for over twenty years until I realised that, taking into account queuing time and its circuitous route, walking is just as quick, is better exercise, and means I only need a point to point season which is almost £1000 less than a Travelcard.

Boris bikes are even quicker, better exercise, and still much cheaper than a Travelcard.
"The driver has been instructed to wait at this stop for a short time to even out the service"

Could this have something to do with The Maintenance of Headway or is that just a made up term created by a bus-driving novelist?
Some years ago TfL said that all passengers would have to touch in on multiple entry buses, but it seems to have fallen by the wayside: there's no penalty unless you're a PAYG dodger.

I'm always surprised how the staff at NR stations hold the wide gate open and wave people through. Great if you're using a fake or expired ticket, not so great if you're paying higher fares as a result of the lost farebox income or having to stand because the incorrect footfall stats say that longer trains aren't needed.
How do the electric buses recharge their batteries? And how often do they need to do so?
Those of us from outside the capital can still purchase paper Travelcards for daily and weekly use. Trying to get a Red Arrow driver to look at one is next to impossible, so boarding anywhere seems to be a better option.
why does it use single deckers? Is it a route with height restrictions?

dg writes: Yes, otherwise everybody on the top deck would be killed entering the Strand Underpass.
The Strand underpass has a 12'6" height restriction
The Strand Underpass - and the fact these are insanely busy buses - are exactly why TfL put bendy buses on the route in the first place.

Still, Boris knew best.
At the height of the morning peak (07h44 to 09h32) there are 48 journeys from Waterloo to London Bridge, but only 36 from London Bridge to Waterloo. Even though the journey is supposed to take two minutes longer starting from the London Bridge end, that is quite a difference. More buses are needed to operate in one direction than in the other. And many of the buses (all of them at weekends) will be back at the garage for much of the day.

Though, as DG remarks, this inefficient use of the vehicles is still much cheaper than a new tube line.
For Frankie - bus batteries are recharged overnight mostly. Some buses return to shed during the day for a top up, as not all of them are on the road all day. The Red Arrow base is London's first all-electric bus depot, at least since the trolleys and trams left... Next step is "opportunity charging" where buses grab a fill-up by induction loop or pantograph at termini - see TfL route 69 or out in Kent at Greenhithe.
Ah you saw the wonderful 243 queue - I used to use that every day to get to work in Clerkenwell and the queue is a thing of wonder.

It's the only bus connecting Waterloo to Clerkenwell / Farringdon, and is in high demand. On busy days or when the bus is delayed, the queue snakes its way the whole way round the Waterloo bus stops, often doubling back on itself and sometimes even stretching back to meet the 521 queues.

Is there a finer, more self-organised bus queue in London?
lockedintheattic - Nowadays the 172 also connects Waterloo to Farringdon/Clerkenwell. It takes a different route to the 243 once on the north side of the river though: around Aldwych onto Fleet St, and then turns left up Farringdon Road. In theory it terminates at Clerkenwell Green, but recently it seems to be finishing at Holborn Viaduct.

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