Draft one of a manuscript is for you. In this draft, you get to tell your story to yourself. You can write as much as you want, go off on tangents or side quests, or infodump and worldbuild to your heart’s content.
Draft two is for your readers. Draft two is where you rework the story you told yourself to ensure that you transmit it to the readers in a way that is entertaining, enjoyable, and understandable. That’s not to say it has to be basic or simplistic—but it must be comprehensible.
As Neil Gaiman is fond of saying: In draft one, write down everything that happens. In draft two, go back and make it look like you knew what you were doing all along.
So where do you start? Here’s how I usually break up my phases of editing.