It sounds like you are expecting the ETF would be creating more shares frequently which it does not. That would have to happen as a secondary offering and it would dilute the value of all the other shares in circulation, Assuming they are the same class share.
There's no dilution with ETF. When ETF shares are created (via formation of Creation Unit), the ETF holdings increase by equal amount of underlying assets. You can create as many ETF shares as market demands (until you run out of possibility to buy underlying assets).
but from investor point of view it still works as I described - she goes to market, places bid for ETF shares. Then the process splits as following:
a) if there are sellers in the market she gets her shares from them b) if there are no sellers, market makers will still sell her the ETF shares
then once market maker accumulates enough cash from buyers, he purchases/borrows shares needed for exchange for N creation units from ETF trust.
I don't think market makers just go and create ETF shares without there first being demand for them?