Or, let's say you are the driver of a car and see a pedestrian coming towards you on the road. What do you do?
I must clarify the "wave" though. It is not an all out "Hey! I'm over here!" wave, but a nice little hand wave. The driver waves too. Do you have to know the person you just waved at? No, probably not, but it's just something you do when you walk around your neighborhood.
At least in the South. :-)
I've noticed this does not happen in California. In fact, I'm pretty sure it doesn't happen any where else in the USA based off of the comments I have had from my dear Northern friends about this topic.
I think that a walk is a whole lot more pleasant when everyone is friendly.