What you are asking is pretty broad. You could be a policy analyst in many different areas (economics, aboriginal affairs, environment, general politics, international affairs, etc.).
I just completed a co-op term where I did some policy analysis and from what I saw you work in an office setting usually. And the work itself it uses your knowledge and research to look at current policies or proposed policies and identify any shortcomings, any good/bad side-effects, etc. After you have identified that you usually present your findings and make suggestions regarding the policy to a person of more power.
University of Ottawa: International Economics and Development (Third Year with Co-op)
Feel free to message me!