Entering the editor presents users with the clips uploaded to their account, but you can't edit others' videos (though, you might be able to download a video and reupload it to your account). Currently, the tools mostly revolve around the ability to stitch together clips in any desired order to create a single video, and you can also watch the current progress of your mash-up with an included video player.
YouTube also provides thousands music tracks that you can drag onto your video to overwrite the existing audio. Unfortunately, by using the songs you grant YouTube the right to display ads in your video, but if you need an audio clip for your video, it's a small "price" to pay. The existing library will grow as YouTube signs more deals with copyright holders.
The editor is rudimentary to say the least, but it's only just been added to YouTube's "TestTube" – the company's sandbox, if you will. If a large number of users flock to the service, you can bet that more features such as video transitions, effects and titles will be added. For now, feel free to check out what's available and be sure to send them your feedback.