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Real-time video editing is a system of editing video where it takes no longer to render a video than the length of that video clip itself. For example, when editing a 30 minute video clip, it would take the system no longer than 30 minutes to render that video clip. Put another way, using a real-time system, you can immediately preview your video editing work, at full quality, without any rendering delay.
Computer systems designed for quality real-time video editing employ the highest-quality components, like multiple CPUs, multiple gigabytes of RAM, fast hard drives, etc. Some have additional hardware components designed to enhance the performance of the specific video editing software being used. Other schemes used to ensure real-time playback include continuous background rendering, and using multiple networked computers to share the rendering load.
Many editing systems have "near" real-time performance - rendering is typically real-time, except for complex segments. Most professional nonlinear video editing applications have the ability to provide real-time video preview at lower than final quality, to streamline workflow during editing.
A lot depends on the effects, transitions, titles, compositing, and other features - and quantity of features - added to the video prior to rendering it. The more the effects being applied the more the power required from the system to render the video in real-time.
Systems designed for web or mobile publishing often handle smaller images sizes than those designed for DVD output, and can render effects in real time quite easily.