Blacklist is entities that you are expecting to be unavailable so should not appear in the list. For example - the Alexa Media Player component creates several sensors that are unavailable a lot of the time, and I don’t want them to be monitored.
Whitelist is for entities that might not be in the states list on startup, for example - homeassistant reboots and the Hue hub isn’t ready when it does. Since hue became configured via ‘integration’ this means that my lights would not appear in the states list until they are dynamically added when the Hue hub becomes ready. If that isn’t for 10 minutes, then the ‘normal’ bit of the sensor that goes through the states list won’t know that I should have multiple lights and sensors from the Hue hub so will return 0 unavailable entities when in fact there are around 20. Whitelist makes the sensor look for devices that should be in the states list even if they’re not.
Entities that are not on either list should be monitored as well.
It works perfectly, except for the duplication.
Possibly a more concise way to put it:
Sensor should ignore anything on the blacklist.
Should report anything in states that is unavailable.
Should also report anything that is in the Whitelist but not in the states list yet.