Editing covers a great deal of territory. So here we will attempt to condense and simplify things a bit so you know where to begin.
First, you may have heard of content editing or structural editing. These are both Developmental Editing. This is the first stage of the editing process. In this stage, the editor needs to look at the overall story components: Plot, Characters, Structure, Pace, Point of View, Style of the Narration and the Tense its written in.
The plot is essentially all the events that take place in the story from beginning to end.
Characters or actually Characterization is how the characters are presented: how they and their behavior is described so that the reader can understand their behavior throughout the story.
Pace is the speed at which the story develops. It will dictate if the readers feel bored or rushed. It doesn't need to be constant, but can have variations throughout with action packed sequences and then slower sections that allow anticipation to build.
Point of View is exactly what it sounds like. Its the voice of the narrator and should be easily identifiable by the reader. If its a character, the reader should know which one.
Style of Narration is going to have a distinct bearing on Point of View. First person is one of the characters and their thoughts. Third person is an outside observer of the characters, but with no access to their thoughts, and who does not inject thoughts of their own. Omniscient is a "godlike" narrator who has access to all the characters thoughts and can share them accordingly, but whom also does not inject thoughts of their own into the story.
Tense is basically dictating if the story is told in the past or the present.
Developmental Editing is the stage where plots, themes, viewpoints and pace need to be adjusted. These need to be addressed before moving on to the other forms of editing.
Next is Line editing, which is also known as stylistic or substantive editing. This form of editing looks for and revises the flow, style and sense of the sentence structure in the writing. It looks at the following:
Character voices: word choice and authentic speech.
How consistent the characters traits are and how they are revealed.
How consistent is the viewpoint and style of narration? How clear is it?
Are there cliche's or awkward metaphors?
How well does the dialogue show voice, mood of the scene and intention of the characters?
Are the tenses consistent? Are they effective?
"Show, don't Tell" - Ensuring that there is not an information dump of unnecessary details that bog down the story.
Then comes Copy Editing. This is the technical part of sentence level work. At this stage, the editor will be looking at the following aspects to the writing:
How the chapters are sequenced.
Is there consistency to the spelling of the Proper Nouns?
Dialogue tagging - things like "asked Sue," & "said James." Also punctuation will be examined.
Spacing of letters, words, lines and paragraphs.
Grammar, capitalization, spelling, syntax, punctuation, and hyphenation.
Standard document formatting.
The final stage of editing is proofreading. It's the last chance quality control check of the work before publication. Here, the work is examined for literal mistakes and/or layout problems that may have been missed in previous editing processes.
Authors need to see to it that their works go through every stage of editing. This can be done themselves or they can choose to hire a team of professionals. Be sure, when hiring, to find out specifically what type of the service the editor offers, as you want to be sure its going to meet your needs.