"Edit current" always creates a new pending revision, regardless of whether one already exists or not.
"Edit latest unpublished revision" opens the most recent pending revision, if one exists. If not, it creates one.
The Potential Problem
Because "Edit current" is always present (see History, below), even when there is a pending revision, it is possible to create multiple pending revisions. This can lead to confusion about which pending version has the most recent updates and may result in inaccurate or incomplete content being published.
If you have multiple pending revisions, you will need to make sure the top-most revision under the Revisions tab has the latest edits, then save that revision with a log message indicating that it is the correct version. For non-catalog content, you may then publish that revision, which will force the incorrect revision to be archived. For catalog content, this will happen once the next academic catalog is published.
In Release 1.13, the label of the "Edit latest" tab was changed to "Edit latest unpublished revision".
The short version:
The label was not completely accurate. In almost all cases, if the "Edit latest unpublished revision" tab is visible, use it rather than "Edit current".
However, there are some important (and confusing) situations where "Edit latest" is not accurate (see 'long version' below), so the text was changed to reflect what actually happens when that tab is clicked.
The long version:
Previous to the CMS upgrade in October 2013, a given published node had EITHER an "Edit current" tab if there was no pending revision after the currently published one OR an "Edit latest" if there was a pending revision. Since only one tab was active at a time, this kept most editing simple.
This caused confusion for several users, who clicked the "Edit current" button, because they discovered it seemed that any previous edits they had made and saved were 'missing'. They weren't actually missing, but the change in the process from the CMS upgrade made it seem so.
Clicking "Edit current" begins a new pending revision, regardless of whether or not there are any other pending revision(s) already present. For nodes with no pending revisions, this acts as expected, creating a new pending revision. For nodes with pending revisions already present, however, this results in a new pending revision based on the currently published version, with no awareness of any changes made in other pending revisions (imagine this newest revision 'leapfrogging' over any earlier ones). Once saved, the Revision List screen will show the yellow published revision, as normal, with two (or more) pink pending entries above it.