Editing is correcting writing. So any mistakes in the writing, grammar/usage/clarity/story/characters/etc. should be on the table for editing.
These are my steps:
(All in chapters, but my chapters vary from 500-6000words)
1. Write it. (First Draft)
2. Comb through. (Grammar, misspellings, switched words, odd wording)
3. Sit back, ponder on what to fix the story and where holes might be.
4. Organize corrections.
5. Start rewriting scenes.
6. Revise some scenes, without revise.
7. Check if rewriting is needed for 6 (Revise Draft)
8. Comb through.
9. Edit for clarity. (Action scenes, long dialogue, difficult parts)
10. Edit to tighten. (Shorten sentences, combine likewise sentences and combine paragraphs)
11. Read through, combing and editing lightly
12. Let it rest. (Last Draft)
13. Get betas and see what they think.
14. Make necessary edits.
15. Publish. (Final Draft)
This is a very useful list, Will. It might help me sit down, breathe, and plan better, as I tend to groan and squirm around the time for #4 and #5.