It is called "delete and re-draft". Hit the three dots (...) at the bottom of your toot, pick "Delete & re-draft" from the pop-up menu. Note that the original toot gets removed, but the contents gets copied into your edit-box-thingy so you can re-write it.
Kinda cool, but, as mentioned, the drawback is that the original toot gets deleted, so bear that in mind if you have already had other people interact with it.
@Bro666 @stephenfry @spytfyre yes, I read here, https://fedi.tips/how-to-use-mastodon-and-the-fediverse-basic-tips/
“Can I edit my posts?
On Mastodon, post editing will be available in the next update but it’s not here yet. The feature has already been written and is in the code, but it hasn’t been activated yet.”
Apparently it is available in mastodon v4.0
https://mastodon.online/@atomicpoet@mastodon.social/109298563498429598
@Bro666 @syps @stephenfry @spytfyre
For servers running the very latest mastodon code there is actually a true “edit” option alongside delete and re-draft 😁
@wiredfire @syps @stephenfry @spytfyre
WHAT! 😍 That is huge.
@wiredfire @syps @stephenfry @spytfyre
Current status: in awe 
Turns out **you can** edit your toots on instance with the most recent version of the server software.
My bad, my apologies, but it is new and not yet available on all instances.
@stephenfry @spytfyre I didn't meant this in a sexual way.
Ok maybe I did