There isn't any real existing difference between these two words, so I'm going to make one up in order to describe my idea of the two different kinds of edits we make to our work.
In my made-up lexicon, redrafting is what you do of your own accord, after some time has passed from your first draft. This is what we do after the first draft of the ms is finished in order to polish it up so that it is worthy to be sent out either to agents or to beta readers. These edits are relatively more minor, often somewhat cosmetic or simply technical in nature, and while they are also very important, they are not going to catapult the ms into any new realms of quality--this is just part of what must happen to every ms before it can become a book.
On the other hand, rewriting is something else entirely. Rewriting might happen during the redrafting process, to be sure, but I think that most non-established authors aren't going to be able to do the rewriting effectively without a lot of time between the first draft and the rewrite, and probably not without some sort of external motivation or help (critique group comments, a growing stack of rejections, feedback from a mentor or editor or agent). In essence, rewriting is undoing or otherwise changing some part of your existing draft: cutting down overwriting you couldn't even see, cutting or changing characters that just didn't work, adding or dropping or totally redoing scenes or sometimes even entire sub plots in order to fix the flow or pacing or whatever in the novel.
I think that as a writer becomes more experienced, the distinction between these two processes disappears to some degree. That's what I'm finding, and I have a feeling that this is universal: all those things that other people had to point out for me in my earlier books, I now see automatically in my own writing. Not that I expect to ever see everything, but each time I do the revisions to a new ms, and each time I get feedback, I'm assimilating new information that (hopefully) no one will ever have to tell me again.
Redrafting is always easy to justify and enjoy, because it is simply improving what you've already done. But rewriting is more about discovering what you could have done better, and doing that instead of whatever you actually did. That can be a blow to one's pride, but it is also important because it is actually improving ourselves as writers, rather than just one ms.
The hardest part of that process is learning to filter out that backstory which slows down/distracts from/otherwise hampers your story. That, or losing those elements which are simply uninteresting to readers, though they are interesting to you as the writer. That's the part that really hurts, I think, because when we are first writing it is hard to know what will be of interest to others (not to mention what will seem far fetched or cliche). That’s "killing your darlings."
A lot of writers seem to abhor doing rewrites, or at least find it an intensely painful process, but I've never found that for myself. I differentiate between the story as it exists in my head from the way it comes out on paper. The rewrites just take me closer to being able to make other people feel about the story-on-paper the way I feel about the story-in-my-head. To me, that’s much more important than the sanctity of the actual story-on-paper itself.
Even veteran novelists have to do rewrites when they pick a story that really challenges them. That’s always the goal, right? To push yourself even farther with every story you write. If you read the foreword in the Author’s Definitive Edition of Orson Scott Card’s SPEAKER FOR THE DEAD, I think that has a lot of very interesting comments on this subject. The work was most certainly not his first, and yet it took him something like 4 complete, ground-up rewrites of the book before it worked the way he wanted. It was just a new style for him, and a different kind of story from anything that was out there in his genre (sci-fi). It took him a long time to get it right, as well as feedback from a couple of other noted authors, but that book went on to win both the Hugo and the Nebula awards, which has only ever happened to about six authors (and to Card twice, incidentally).
This is what I think about when I’m doing rewrites. I always figure that today-me is much smarter and wiser than yesterday-me, so it doesn’t offend today-me to find out that yesterday-me made some mistakes. I’m just happy to strengthen my story and my craft in general. But whatever your take on them, rewrites are just a part of this business, like rejections and bad reviews.
(Note: this post is adapted from comments I originally posted over on Good Karma Reviews.)