What does "waive off" mean?

Solution 1:

The expression being used is wave off, not waive off.

This website from the Indianapolis Speedway explains it quite well:

Wave off – The process by which a team forfeits a qualification attempt. A driver or team can “wave off” an attempt any time before the start of the fourth and final lap in the attempt. If the run is waved off before the car takes the green flag, it does not count as one of the three allowed attempts for that car. Once the green flag is waved to start the attempt, the run counts as one attempt, even if it’s waved off.

If the context isn't auto racing (I assume it's not—what are live slugs doing in an auto race?), it's borrowed from auto racing, and has the same meaning.

Solution 2:

I believe the origin of the phrase was in aircraft carriers, which have (or at least had) a crewman standing by when a plane came in to land, with a pair of signalling bats. One signal meant "lose height", another "cut power", and so on. If, however, the pilot was coming in far too fast (or the wheels had not extended properly), the batsman literally "waved the pilot off" the deck, and he went round again.

Solution 3:

I believe this is slang, and Urban Dictionary does give a definition, although I don't know how much weight can be placed on this, but anyway, waive off means:

When someone or something gets ignored or disregarded.

This seems to make sense when applied in the context given, where Person A gives some disheartening information, but Person b is shouting for the others to ignore what Person A is saying, as it is "just a practice run", and therefore, nothing to panic about.