It varies a lot from subject to subject. For most humanities it will be as LDR describes. For sciences, most of the time doing a dissertation involves doing a research project (however, I'm guessing this is not the case, as for these, supervisors are usually allocated in second year, allowing data collection to take place over the summer).
The university will hold a session soon explaining how it all works, as it can be quite institution specific. She should be allocated/allowed to pick a supervisor based on her research interests, who will be able to offer help and advice, and may be allowed to review drafts, depending on the institution's rules.
At this stage, the best thing for her to do is to think about what she might like to research. If there is an area that interests her, she should do a bit of extra reading in this area to see if anything inspires her. If she is really unsure, there may be examples of previous dissertations (from her university) online, that might help her decide what she wants to look into. Once she has a supervisor, they will help her narrow a general idea into a specific question.
If she is really worried, does she have a personal/accademic tutor she could speak to?