The devil is in the details, in the
useradd man page (you can see that by issuing
man 8 useradd):
-u, --uid UID
The numerical value of the user's ID. This value must be unique,
unless the -o option is used. The value must be non-negative. The
default is to use the smallest ID value greater than or equal to
UID_MIN and greater than every other user.
So it will default to using the smallest uid unused, that is larger than other users, in the password file. Seeing as deleting sbaxter removed him from the passwd file, his uid is "free" and gets assigned to mjane (as the uid
useradd picks is the same for both users at the time the
useradd command was used).
Files on disk only store uid, and NOT the user name translation (as this translation is defined in the password file). You can confirm that by issuing
ls -ln to see what uid ownership files have.
I would actually recommend you disable rather than delete accounts. Locking accounts on most Linux distributions can be achieved with
usermod -L -e today <username>, which locks the password and sets the account to expire today (you can see the expiry date of an account with