You can edit lyrics in the Score Editor. Select the arrow tool in the toolbar (the first one on the left). Make sure the L is selected in the object palette. Select a lyric by double-clicking on the lyric. The Edit menu will appear. Choose the lyric editing operation you would like.
You can edit lyrics in place that have already been entered using the pencil tool. Make sure the L is selected in the object palette and then click on the lyric you would like to edit.
You can also erase or move lyrics using the other tools in the toolbar. Make sure the L is selected in the object palette. Select the tool you want and apply the edit by clicking on the lyric (to erase using the eraser tool) or by dragging the lyric up, down, left or right.