Let's talk about the overwhelming exercise of editing your manuscript for a moment. And it definitely CAN be overwhelming, especially if you're in a critique group that's great about giving feedback, like the groups I currently belong to. You come back from your group with lots of notes, you sit down with your manuscript and the feedback, and then... freeze. If you listen carefully, you can actually hear the gears of your mind grind to a halt. You stare at your manuscript, and it's like you were back at the very beginning of the process, when you were staring at the blank page, wondering what to write.
Now let me jump into a day-job-related analogy. I worked with a guy at my last job who loved to put down what he liked to call The Big Bang Theory style of software development. This is one view I agreed with him on wholeheartedly. The Big Bang Theory goes something like this: When you're given a bunch of requirements to develop or enhance your software, you just throw them into your code all at once. You can take a wild guess what's going to happen if you do something like that. Your computer's inevitably going to go splodey, and you'll have no CLUE which one of the 15 things you just wrote caused the blue screen of death to appear.
How do you prevent something like this? You program ONE THING AT A TIME, then test it to see if it works before moving onto the next thing. Not only does it save headaches trying to figure out what went wrong, but at the end of the day, you've ACCOMPLISHED something. You can say, "I got this one thing done, and here's the result."
When you edit your manuscript, you should be approaching things the same exact way. Avoid The Big Bang Theory approach. Address each of those comments one at a time. You'll prevent your head from going splodey, and you'll have something to show for your work at the end of the day. Isn't it much better to say "I fixed all the dialogue throughout my entire manuscript" than "I've been trying to tackle all these issues and I've only gotten to page 10"?
Let's say the comments you received on your story are similar to the following:
1. The dialogue between the two kids in chapter 1 doesn't sound very authentic. They sound more like adults talking than kids.
2. Your language needs to be tightened up in a number of places.
3. Your story opening doesn't sound strong enough. Make the reader identify with the main character and her plight, and make the conflict more immediate.
4. The dialogue in chapter 3 also doesn't sound very authentic.
So, first reaction, brain freeze. After that, break the feedback down.
You have two comments on dialogue there, so I'd combine those into a general editing task of reviewing ALL your dialogue to see how authentic the voices are.
The others are categories by themselves - tightening up your language, and fix your story opening.
Pick one of these items to tackle and complete that first before you go on to the next. Continue until all issues are addressed. Also, once you've finished each issue, you can bring what you've done back to your critique group and show them your progress on that one issue. It'll be easier for the group to process as well, and they can stay focused on helping you with the one issue.
How do you know which one to pick first? Again, I go back to my day job for inspiration. I always pick the largest problems first and work my way down to the smallest ones. Why? Because the large problems always have the most widespread effects, and they tend to swallow the smaller problems once fixed. Changing the way I coded something to make it run faster, for instance, doesn't make any sense if the code itself doesn't work.
Similarly, tightening up the language of chapter 1 in the example I mentioned above doesn't make a lot of sense if you're going to rewrite the entire chapter anyway. So do that larger task first.
So, to recap: Approach your editing logically. Break it down into manageable tasks. Work from largest to smallest, and complete each one before moving onto the next. Don't take The Big Bang Theory approach. Keep your brain from going splodey on you. You're going to need it for the next writing project.
Feel free to comment if this method helps, or describe your own editing techniques. I'd love to hear others' experiences.