This thread is a wonderful one that answered many of my questions about the auditions. You should definitely check this out (it says Disneyland auditions, but the audition process is mostly the same for both parks.)
But in case it takes a while to find, what I've read has told me this (not necessarily in order):
When you go to the audition, they have everyone do a dance audition. It's usually pretty simple, but it could be any dance to any song; they change it each audition. They measure you to see what characters heights you fit in with. After they do this, they'll make a cut. After this cut, they stand people in lines to just observe how you look. They'll make cuts after this. Then, you get to go in and read for the character, do improv acting, and if you survive that, they might wig you. They'll have your picture taken and sent to casting.
Like I said, this is all from what I've read. I've never auditioned, and the thread posted above can help a lot