Beta readers are well-read in their genres and give detailed reader feedback to a writer BEFORE a piece of fiction is submitted to agent or editor, or self-published. Typically they receive an electronic copy of the manuscript (which should be a complete first draft that is as smooth and polished as the writer can manage on his or her own), and they email back a detailed reaction/comments. The writer gets invaluable feedback, and the beta reader gets a free read and the satisfaction of being deeply influential in a writer's publishing process.
See my collected articles on beta readers
for more info.
And please feel free to post here if you would like to FIND a beta reader or BE a beta reader. You can then private-message each other through the forum to work out the details.