Editing formats refer to the type of file that the footage is, such as H.264, DNxHD, etc. Although Premiere Pro supports most formats these days, some formats are better than other in terms of the amount of computer resource they require to 'interpret' and playback the footage. H.264, for example, requires a lot of computer resource, as it is heavily compressed to make the files smaller. This means that Premiere must draw more CPU power to play it back smoothly. Something like MXF, although the file sizes can be larger, is less compressed, so it is a better format for editing with, as less CPU power is required to 'unravel' the compression. It can be tricky to understand, but once you do, it can make planning your productions much smoother.
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