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Book editors do largely what you would assume: They edit books.
One of the most important things book editors do is acquire books. Book editors read manuscripts (aka unpublished drafts of books) and decide whether the work should or should not be bought and then sold to the public. That decision usually comes down to taste and an eye for the market. (While an editors fate isnt entirely dependent on how many bestsellers he delivers, the people who get ahead in this field almost always have some big name books under their belt.)
If you love books and love to read, a job as an editor can be a dream come true. That said, there arent an abundance of needles in the proverbial haystack. In other words, much of a book editors time is spent sifting through manuscripts that will never see the light of day, so you have to be OK with reading a lot of bad things in order to find that gem.
Another aspect of an editors job entails cultivating relationships with authors. Book editors are ultimately looking to discover new talent, publish them as unknowns, and then continue working with them as they build a bigger audience. For this reason many authors will have only one editor for most of their career. (Writers, who have good relationships with their editors, will often follow the editors as they change jobs over the years. This means that editors who work with high-profile writers are often more valuable to publishers, since they usually bring big clients with them.)