Editors do two things. Developmental editors read a novel holistically, checking that the plot hangs together, assessing the role and place of the characters in the story, considering whether the setting is properly described and whether any historical, scientific or geographic details ring true. It's possible that a further specialist edit might be necessary, for instance to check police procedure in a crime novel.
The other type of editor is someone we usually call a line editor. This person goes through the book checking the grammar, spelling, writing style and all the other things you'd expect to be of the highest possible standard in any book. By the way, a proofreader simply checks over the finished product for typos and so on – although nowadays that might perhaps mean checking a pdf file before it heads for the printers.
Going back to Kendra Olson's article, the thing to watch for is what she charges. These are standard costs, she's giving a lot of her time. If you can get someone to do the job instead for free, they're saving you an awful lot of money.