Two of my sites drop from #1 ranking in Google to more than #400 and then now ranking at about #100 place. What's happening? Is it gone into sandbox or being blacklisted? My other website not seriously affected though.
Once you are out of the sandbox (google starts factoring you backlinks for SERPS) you don't go back in. If this is an older domain (more than 3-4 months old) you can discount the sandbox since you have already been at #1. You may have gotten some sort of a penalty (overoptimization, hidden text, etc), or it could just be a normal shift. Every once in a while I see the same thing happen, but it usually corrects itself in a few days. Have you made any changes to the site or lost any important backlinks? If not, I would just wait to see if it corrects itself. I don't see anything unusual with any of my sites.
The "Google Dance" seems to be more a thing of the past after the "Florida Update". There are ups and downs still occurring but, all in all it is much less turbulent than before. As for your specific rankings, depending on the exact dates/times, it may be as simple as Google reverting to older data on the specific datacenter being searched which can cause the variance you saw. Keep an eye on it and it usually levels out (unless others are countering your IBLs with those of their own). There may also be the phenomenon of newer sites/pages reaching towards the top for a brief period of time and then slide back to "normal". That doesn't sound as plausible in your case due to how far back it slid (search for "sandbox" on this forum for more details).
There is definitely some funny stuff going on with the Gmonster. The Gbot has been hamering a couple of my established sites. The number of pages in the index cache seems to be bouncing around as well.
My site just established for about a month plus, initially listed in top 10 and finally at #1. So, will I am not sure it has been sandboxed or not. And then since last week it suddenly drops in ranking.