Zakattack,First, just to be clear, that information is referring to books, not short stories. If you're interested in books, you should learn all you can about that stuff. It means a lot.
(I think it helps to write and publish a few short stories along the way, myself. At the very least, it shows an agent and editor you have the ability to write something worthy of being published in some form.)
Yes, it seems most book publishers prefer to look at a book an agent is representing. This acts as kind of a pre-filter. It trims some of the slush off the top of the pile, since agents aren't going to send them manuscripts written entirely in pink crayons.
To get an agent, well I'm not the expert on that. My understanding is to have certain things ready: a partial (about 20 pages of written story), a one-page synopsis, an outline, a short summary (usually used in Query Letters.)
Then you send agents a short query letter, which is essentially asking asking them to take a look at your book idea and consider publishing it.
If they like what is in the query letter, they will ask for something more: usually one of the above things I mentioned. They may even ask for the whole book, but my understanding is it's rare?
Then they may ask for something else, and so forth. Eventually, they'll either send you form rejection letter, start ignoring you, or offer to represent your book--trying to get an editor to buy it for a few pennies or something. (Please excuse the cynicism
)
That's my completely amateur take on how it works. I'm sure others will have better information--which makes me wonder why I'm writing this instead of working on my Work In Progress...
Oh, yeah--because I had a question that relates!
How much should a writer have prepared and polished before they start seeking an agent? Do they need the whole book written and polished, or just written, or just a few chapters, or.... ?