The Offline Edit is where the movie is created. However, one wouldn't really want to cut up the camera negative straight away, as it could lead to damage, plus risking changes (of which there are many in editing). Instead, you edit with copies of the negative, with the timecodes noted. Once a movie is decided upon, the editing is "locked". From here, no more changes will be made to it. Then comes the Online Edit. The movie now goes over to scoring, with the composer creating the music of the film based around what the director wants (often with input from the temp tracks, which have provided rhythm and mood). Writing the score comes before the edit is locked, but the finished score is added afterwards, as otherwise there would be major syncing issues. Sound editing and mixing is done as well. Visual effects are added fully into this stage. After this, it is time to create a master print from which all other copies of the film is made. Now the edit is done from the original negative (as it yields the best quality) based around all the timecodes marked during editing. This master then goes out to creating duplicates that go out to the cinemas and is then stored at the studio.
With the rise of digital, the workflow is slightly different. Digital can in theory be made from the original files, as it is "non-destructive". But as most films are still done on film, it will first need to be scanned, which creates large and heavy files for editing. Same goes for many digital cameras, shooting on large, hard-to-edit files. As such, most material is transcoded into proxy files, the standard formats being Apple ProRes and Avid DNxHD codecs, which are used for editing. When the edit is locked, these will then be replaced (using a linking process) with the originals. The film also goes into color grading. When working with analogue film, some work was done in the lab to control the look, but in digital the possibilities are very big. Today's film stocks and cameras like the Arri Alexa and RED cameras all shoot with very big dynamic range, resulting in images that look rather "flat" but gives detail in both shadows and highlights. On set, these will be previewed with a LUT (Look-Up-Table) with some more color and contrast and then during grading the final look is created. After this, the film is mastered to digital files and then either sent to a negative for film releases, or converted to DCP (Digital Cine Package) for digital projection and prepared for DVD or Blu-Ray releases.