Baboonery,
By that logic it is undemocratic if the BNP or Monster Raving Loony Party choose not to field a candidate in Lewisham West, afterall, you would expect their voters to vote for one of the candidates that did stand - but in the current system they cannot mark that this is their 2nd preference and they would prefer to vote for the Jedi Knights - or at least if they do it is marked as spoilt.
In the elections for Mayor of London and Mayor of Lewisham all votes for candidates other than the top two are redistributed in one go. But this is a little unfair on the third and fourth placed candidates who may be able to muster more support were it not for the even less popular candidates.
More than anything else AV encourages people to vote (in as their first choice) according to their real beliefs, and not to dismiss candidates that traditionally do not do well in their area because in really is a wasted vote. In terms of democracy this gives every voter the ability to express not just their least favourite option between two candidates, but actually tell politicians and the country which party matches closest their views.