I am currently involved in a project to scope out the how the information that individuals know about their own flood risk, and what happens during flood events in their neighbourhood can be harnessed. As a pioneer of user-driven mapping and sharing of geographic information I’d be particularly interested in the processes OSM have in place, if any, to validate the information that individuals upload onto the maps.
As csdf said, validation relies on other contributors looking over edits, often using local knowledge.
To make this easier, there are some tools for watching an area (such as ITO’s OSM Mapper, OWL, and of course the changeset list on osm.org) that let people watch areas they are interested in. When people notice errors, they will either fix them immediately or - if they don’t have the time or skills to fix them, or need additional information - report them on OpenStreetBugs. We also receive a limited amount of error reports from external sources: the company Skobbler, for example, collects feedback from its users and makes it available to the OSM community here.
As an addition to this, automated plausibility checks are offered by some tools, e.g. JOSM’s Validator plugin and Keep Right. Debugging views such as OSM Inspector serve a similar purpose, but again rely on humans interpreting the data and spotting errors. It’s considered good practice by many within the community to use some of these tools regularly to look for data problems in one’s area.
For dealing with vandalism and other more severe issues, the OSMF has a “Data Working Group”, but its activity is limited and it relies on reports from local contributors.
You might also want to check some of the following wiki resources: