Revision vs Line Editing vs Proofreading
These three sit on the same shelf and do entirely different jobs. Revision means re-making choices: a subplot gets cut, a character's motive changes, a whole section moves from the middle of the book to the opening. Line editing means re-making sentences, working at the level of rhythm and word choice without touching what actually happens. Proofreading means catching what's simply wrong: a misspelling, a missing word, a comma where a period belongs. Each one asks the manuscript a different question, and each one is easiest to do when it isn't tangled up with the other two.
Where the confusion comes from
It's tempting to treat all three as one continuum of polish, moving smoothly from rough to finished. They don't actually work that way. A proofread pass can't fix a scene that shouldn't exist, and a structural revision is wasted effort if it's done sentence by sentence instead of scene by scene. Doing them out of order, or all at once, is why a single read-through so often feels like it accomplishes very little of anything.
How this shows up in a real novel
Charles Dickens revised the ending of Great Expectations in 1861, after his friend and fellow novelist Edward Bulwer-Lytton argued that the original, bleaker ending would sit badly with readers. Dickens rewrote the final chapter, changing what happens between Pip and Estella rather than adjusting a sentence here or there. That's revision in its clearest form: a choice about the story itself, made after the draft was already finished, separate entirely from any line-level polish or spelling check that came before or after it.
While you're drafting
Naming which of the three you're actually doing, before starting a pass, tends to save more time than any other single decision in revision.
Questions
Can line editing fix a plot problem? No. Line editing works at the sentence level, on rhythm and word choice. A plot problem needs revision, which changes what happens, not how it's described.
Should proofreading happen before or after revision? After. Proofreading catches surface errors in a text that's otherwise settled. Doing it earlier means proofreading sentences that revision is about to delete anyway.
Is it a mistake to do all three passes at once? Usually, yes. Each pass asks a different question of the manuscript, and switching between them mid-page tends to mean none of the three questions gets a full answer.