There are several different types of editors and depending on what a writer needs the type of editor will change.
However, no matter the editor type, they generally need good grammar and complete fluency.
Editor Types That I Know About
Quick Opinion: Developmental Editors and Line Editors are the most important.
Developmental Editing
These editors focus on plot, story structure, characters, pacing, presentation, world-building, target audience, theme, character-building, setting, timeline, etc. They check the flow of your story and readability for consistency. Do your chapters start and end at appropriate places? Does the story have clear and good pacing/flow as it is told? They are focused with the core of your story and will thoroughly examine the content of your story. Expect developmental editors to ask you many critical questions that force you to justify major decisions you've made in your story. Here's some examples,
"Can you explain this plot hole?"
"Why does character X perform this action in scene *blank*? It goes against their personality type and their motivation is unclear to the reader."
"There is an inconsistency. In chapter ___ you stated that magic works this way, but in chapter ___ your character breaks the rule that you set and there was no justification or you outright contradicted yourself."
"Your major character's development throughout the story is poorly paced and in the end they wind up like *blank*. Is this your intention for this character?"
"Is this character/scene/location/detail necessary for the story and world-building or is it useless fluff that disinterests your readers?"
Good developmental editors make you question why you're even writing your story. A good developmental editor would make you feel like complete shit. "Uhhh, I'm so stupid, why am I even writing my story. This person should just write my story for me!"
Line Editing
They focus on sentence structure, grammar, and word choice/usage. Unlike developmental editors, they are not concerned about the big picture of your story. They mostly focus on paragraphs and sentences in limited context. They will point out sentences and word choices that don't make sense or are hard to understand, often they give writers corrected sentences or ask authors to rewrite confusing text. They will bust your ass with proper grammar when you make mistakes. Tone of your writing, style choice, flow from one paragraph to the next.
Copy Editors
These guys come after developmental editors and line editors. At this point you are finished writing the story and are making no changes to the plot or chapters or scenes. These people are hardcore grammar editors. Typos, spelling mistakes, language, syntax, and all grammar are corrected by them.
Proofreaders
Your book is being published. It's already been designed and is in the final stages. A proofreader will check for any last typos, cut-off text, problems with page layout, problems with word usage/meaning/consistency that simple proofreading programs might miss.
Sensitivity/Context Editors
Sensitivity readers/editors check to make sure your material isn't racist, offensive, sexist, illegal, inappropriate for your target audience, etc. These kinds of editors also check for context, historical fact accuracy, and technical fact accuracy (the professional kind at least, not the touchy feely emotion kind). They might inform you that you made mistakes in quoting historical facts or that you made technical mistakes when talking about science, engineering, etc.
