Documentation for the editor will be posted "after I get a new version [of the game] out in a few days that fixes the problems some people are having, and when more people have played/finished the game," Blow wrote in a forum post noticed by Destructoid.
Along with the documentation, he plans to release a tool "that lets you take Photoshop files and import them into the game, if you want to put new graphics in your levels."
The editor is accessible by launching the game with the "-editor" parameter, and then pressing F11. The "-universe universe_name" command line then dictates the location where the custom level will be saved. In Blow's own words:
If you make a new folder in your Braid directory called "universes", and another one in there with the name of the universe (for example "test")
Then make a folder in test called data, and a folder in data called entities. So this folder exists, e.g. if Braid is installed into Program FilesBraid:
and then run with the command line options:
-editor -universe test
Then any editor files you save should go into that folder. Actually running the levels you save involves an extra step, but we can talk about that after you have got this working.