on Jane Friedman site:
If you’re reading this essay, you’ve probably heard the term beta reader.
Although some people do offer beta reading for a fee, the term usually refers to unpaid non-professionals who give feedback on writing prior to publication.
Unlike critique partners, there’s no requirement to exchange manuscripts; unlike editors, there’s no expectation that beta readers will have advice about how to fix whatever weaknesses they find. They’re civilians, proxies for our future readers.
Typically, they’re people we know, if not personally, then through a friend or writing community. We trust them enough to test our books on them and (presumably) listen to what they have to say.