In a poem that's already big on repetition, "Not Waving but Drowning" is spoken twice, in lines that are exact copies of each other. The fancy term for a repeated phrase like this is refrain. So it must be important, right? Making the phrase the title of the piece answers that question with a resounding yes.
So why's it such a big deal? For one thing, it immediately sets up the poem's strong opposition between what appears to have happened (waving) and what actually did go down (drowning). This opposition is later echoed in the perspective of the useless friends versus the point of view of the dead man.
It also hands us a possible scenario right away so we can make some guesses at why the dead man introduced in the first line is, um, dead. Do we need this kind of hand-holding attention? Well, at first the poem's actually inviting us to think too literally about the situation—that a man drowned in the ocean and his acquaintances are chatting over his corpse—before showing us in the last stanza that we might have to take the drowning as metaphorical.
In a weird way, the title helps us by leading us astray. Tricky, tricky.