A form definition is the set of wd commands that define a parent window and its controls. The Form Editor takes a form definition from a script file, displays the form, supports editing, and saves the new definition back in the script. The script also contains the verbs that handle events when the form is run. The Form Editor facilitates editing these verbs.
The best way to learn about this is to try it. Create a new script and run Edit/Form Edit. Click the Design New button to add controls. Drag controls with the mouse.
Controls can be marked with red or blue borders. The red control is the selection and all marked controls are the collection. The mouse marks and unmarks controls.