A process which is much more than checking for incorrect grammar or misspelled words. It begins with the reading of a query or book proposal to determine if it is publishable and fits the needs of the publication or book publisher. If the proposed material looks promising, they will ask for and review the full manuscript, either decide to accept or reject it, or even ask for needed changes before deciding to buy it. If the material is purchased, the editor will handle the contract (if there is one) and may ask for changes at this point. With books, the editor is responsible to recognize any potentially libelous material and send it to the publisher's lawyer for verification or release.
A good editor is one who can readily recognize what material fits the publications focus and audience, or if a book editor, which books and authors will help build the publisher's line. There are different types of editors—each responsible for specific duties, which may vary from publication to publication, or publisher to publisher. An editor usually becomes a liaison between the publisher and the author. Some are responsible to find and correct any errors in a manuscript, while other oversee the bigger picture and carry the manuscript to publication. For an interesting look at editing, go to: http://www.nytimes.com/2005/07/31/opinion/31shipley.html?pagewanted=all&_r=0.