I gotta throw my two cents in as well; I used to work at Texas Instruments' huge 'machine shop' in Dallas and they had about a dozen different EDMs. Cool stuff; they made some parts I'd swear were impossible.
1) Thanks Swede for the link; very descriptive of the process.
2) EDM is used to create precise shapes in metals that are too hard (or too thin or too soft or too whatever) to machine using conventional tools. Wire EDM is by far the more common of the two types, since ram EDM requires the ability to create the shaped electrodes, itself not a simple task. Wire EDM is often used on super-thin sheets of metal, foil actually, that would be impossible to cut any other way. It is also used to cut THICK parts out of hardened steels, titanium, and other exotic metals. The 'dielectric fluid' is often motor oil, although I'm sure there are special concoctions for the purpose. The fluid cools the cut and carries away the 'chips'; it is filtered and recirculated within the machine.
The reason to EDM rather than just machining (milling) the shape is 1) the metal is too freakin' hard to cut, and/or 2) the cutting tool flexes when it contacts the workpiece, so the cut ends up having a little bit of taper. This is nearly impossible to control, and under normal circumstances the amount of taper is negligible. But a thick workpiece with fine details (like a trigger part) requires a smaller diameter (more flexible) cutter, and the taper can be enough to have detrimental effects. Since the wire is 'pulled' through the material like a cheese slicer, it does not create a tapered cut. Plus a wire EDM can cut sharp inside corners, which a mill cannot do without additional operations.
Short answer: an EDM sear is one that's been cut out of a sheet using a wire EDM machine. It is more accurate than a conventionally-produced part.