How do you edit a play list in Itunes on a PC?

It's far easier to edit the Playlist in iTunes, then Sync it to your phone.

Also, editing Playlists depends on which type of Playlist it is.

• A Regular Playlist can edited by dragging songs into it, or by you deleting them from the Playlist. The icon for Regular Playlists is a musical note over lined paper.
• A Smart Playlist is edited by changing the rules of the Playlist or changing the tags of the song. You cannot simply drag songs in and out of the Smart Playlist. The icon for Smart Playlists is a toothed gear.
• Playlist folders cannot have songs inside them unless the song is in a Playlist. The icon for a Playlist Folder is th grey rectangle with a tab in the top left (like an old-style paper folder).

Which type of Playlist are you trying to edit?

It seems that you’re attempting to edit the playlist copy on your iPhone, rather than the one in iTunes, that you then sync to your device.

Enable Sidebar in the View menu. Select Music from the media kind menu just above the sidebar. If you don’t see the menu, click on the left arrow. Now you can select right-click on a Smart Playlist and choose to Edit the playlist. For manual Playlists, select one and add or delete contents. If you want to move items directly from your library or another playlist, select the source playlist, select the items you want, drag them onto the destination playlist in the sidebar.

To get the changes onto your iPhone, select the device from the devices icon above the sidebar, click Sync in the main iPhone summary page.