The tex file, say, file.xet, is written in visual order (english from left to right and hebrew from right to left). It has to be written according to special rules. (See ~haran/bin/sources/heb2beh.c for some explanations.) The file demo.xet should help you to see the implementation of these rules.
Command
xet file
or xet file.xet (or laxet file or laxet file.xet)
runs (according to the alias in your .cshrc) the script ~haran/bin/xetsetup
with several options.
The script first calls the program ~haran/bin/heb2beh that produces from file.xet a new file file.tmp written in logical order. Then it runs etex or elatex (an extended version of tex/latex) on file.tmp. If everything is well, you get a file file.xdvi and file.tmp is removed. If tex gives an error message, hitting "e" for answer will make vim -H open file.xet on the line with the error.