Redaction is a form of editing of a physical document by means of censoring, but not necessarily omitting, specific words, sentences or entire paragraphs. The portions that need to be redacted are simply blacked out so that they cannot be read. This is often done in court or government documents in which certain copies that need to go to organizations or individuals, who do not have the right clearance or privilege to know about certain pieces of information, have these portions blacked out. If redaction is applied to electronic documents, however, it simply means the permanent removal of information and not the obscuring of it.
Redaction originally meant to literally edit and make ready for publication, at least as evidenced by its usage in the early 15th century. Today, that meaning still holds true in a sense, but in a more "edit out," obscure or remove kind of way.
Redaction is often done on physical printed documents and not on the source files, so it becomes more like a post edit. An example is when a certain legal document needs to be distributed to people but not all of them have the right or privilege to view certain information contained in the document, and it must be kept intact for those who do. Rather than editing the source file, it is the printed copies that go to non-privileged individuals that get redacted, i.e., the information that the said individuals are not privy to is simply blacked out so as to become illegible.
This is a common practice within government agencies, especially those dealing with sensitive information and with certain legal documents that need to protect certain information but need to reveal other information in the same document. This is done to prevent tampering with the source material.