When is it visible? When the current document doesn’t have a translation for the current UI locale (of course, multilingual needs to be on).
What does it do? Opens the in-place edit mode or takes you to the stand-alone edit mode (Wiki or WYSIWYG) for the missing page translation, depending on the preferred editor and wiki configuration.
What does the Edit button do then? When the Translate button is visible the Edit button is used to edit the default translation (original version of the page).
Please check the videos attached to the linked JIRA issue and let me know if you see any problem with the change I made.