When you generate an EDL, you create an EDL from a clip in the clip library in any of the supported industry standard formats (such as CMX3600, Sony™ 9100, GVG). These files are made up of metadata only.
In the process of outputting an EDL, you actually output the media used to build a clip to the clip library or to a VTR. This is useful for quickly dumping source clips onto a tape. You can also output an EDL in order to conform a program on another system to perform the final colour grading. In this case, after the colourist has completed work and created a new graded tape, you can recapture the graded material into a final colour-corrected clip using the output EDL.