I've never been to a competitive event, so can someone explain drafting and how to build a deck from it?
Ok. Thanks. Do they draft at pre-releases?
Some places do.
One clarifying point from testset's post, you only remove non-foil basic lands before you start drafting from a pack. Non-basic lands (like {reliquary tower} or {sunpetal grove}) and foil lands stay in for drafting.
Limited Information is an article series on the Mothership that discusses the Limited format: Sealed, Draft, etc.
http://www.wizards.com/Magic/Magazine/Archive.aspx?tag=Limited%20Information&description=Limited%20Information