The application reverts to draft status when an administrator returns the application to the applicant. Returning the application allows the applicant to edit and re-submit. The applicant does not need to re-enter the application material or start a new application from scratch.
To access the draft application, the applicant should click on the application link from their returned application notification email, or log in and click the Applications tab at the top. Click the title of the draft application to open it and make edits.
One thing to keep in mind is that applicants will not be able to re-submit applications after the opportunity deadline has passed. If you encounter a situation where the opportunity deadline has already passed, then the administrator would need to either 1) extend the opportunity deadline, or 2) make the edits on behalf of the applicant.