There are many things that happen to a papyrus fragment once it is discovered. From its original unearthing at an archaeological site, to restoration and preservation, and finally to being inventoried, studied and published, it takes many people and many steps to complete the process. However, the bulk of a papyrologist's work consists of reading the text, creating a detailed transliteration of what he sees, and putting the fragment in context with other fragments, its site of origin, and its historical and, perhaps, literary significance.
The published edition of a text appears quite different than the original, yet the goal is to capture as much of the important information as possible and present it in an understandable format for others to use. Above you can see an example of a papyrus, P. Bingen 133, alongside its published text, edited by R. Caldwell and T. Gagos (more information about this text is available via APIS). Click on the image to enlarge it and compare the printed edition and the original papyrus. In the printed edition, the words of the text are printed along with symbols to indicate various features of the papyrus. By publishing the text in this way, the papyrologist makes the content of the papyrus available for use by other scholars.
In addition to producing the transliterated text, the papyrologist may write extensively on the historical and physical context of the fragment. Many great discoveries in classical studies have arisen from the study of new ancient texts, and it is the job of the papyrologist to work with historians, archaeologists, and others to identify and analyze each new text.