Pre-empt -- essentially the editor is making a bid to close the deal before it goes to auction. It might have an expiration date or the editor might want to "floor" the offer in case there is an auction, which means the offer might be lower if it actually does go to auction. Pre-empts are usually pretty attractive offers because the editor/publisher is establishing a firm commitment, are showing they know it's a hot commodity, and are trying to head off a bidding war. The agent and the author have to decide 1) if they are comfortable/happy with the offering editor/house and 2) do they think it's a fair offer or can they get a better deal if it goes to auction.
Auction -- the agent will set the "rules" for the auction, meaning they will establish what rights/territories the editors are bidding on, by what method the auction will be held, and the agent will often give a sense of what criteria (such as marketing, in Adrienne's case) are important to the author. Auctions can, for instance, be a "best offer" auction, which means editors have to submit their best offers blind, or it can be sequential, which means the lowest bidder has to bid higher the current highest bidder, and so on, until houses drop out and the highest bidder emerges.
