emacsclient waits for emacs server. When you do server-edit, the server notifies emacsclient to terminate.
It all depends on what you are going to do. In chrome I use the 'edit with emacs' extension, which uses emacs server to edit fields like these. From emacs I must notify chrome that I am done by calling server-edit. It is only at that moment that the text get pasted back into the input box (and the frame I am using to edit gets killed). Also, when the buffer is saved, chrome updates the edit field. But server-edit kills the frame too.
But from the command line I don't care to call server-edit. I usually create an alias for emacsclient -n (
e='emacsclient -n' in bash). That way emacsclient does not have to wait for the server. I rarely do server-edit on these buffers.