… In a variety of ways, each to their own (often evolving) needs.
I’d suggest compiling to PDF before trying to print the whole thing out, using one of the manuscript compile formats. Then maybe print out one chapter and give that a go editing on paper before you commit to hundreds of sheets of paper. Some people use a big iPad + “pencil” and a good PDF app for annotation instead of a massive stack of paper, but as an amateur author, I can’t justify that expense.
The way I would do it now, if I had a full first draft to work on would be the following:
Compile the whole thing to PDF. Name it “my fancy novel, 1st draft.pdf”, and then take that pdf and import it into my research folder for reference. Before anything, I’d do a read-through, just to get the shape of the story as it is before changing anything.
I’d do a mass-assignment of “1st Draft” statuses (expand all folders, select all) to all the documents in my novel. I’d do a named snapshot of every document at once, naming it “1st draft”. I’d be sure to have another status created for each stage in my editing process, but wouldn’t be using it right away.
Then I’d start reading it, one file (chapter or scene) at a time, taking notes on 3 levels: Plot problems. Character problems, and Misc problems (I forgot about this minor character! I made a big deal about this magic wand, but it never comes up again…). I’d also start assigning keywords for every character in the chapter (and every character mentioned in that chapter), every location, and every significant object (gun on the mantle). And finally, I’d start a dossier on each character and each location, where I noted things about them that I mention in the book (eye color, mysterious locked door, extreme near-nearsightedness, termites, catch phrase …).
As I said, “each to their own (often evolving) needs”. I need a lot of help making a story coherent, so I use a lot of tools within Scrivener to do so.