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I don't seem to be understanding what's written in the book. For a Druid you would use your wisdom modifier plus your Druid level to prepare spells.
So, do you do this every level and have that many prepared spells to choose from each level? And the ones you already have from previous levels?
When you level, the number of prepared spells you'll have will increase, but you still only prepare specific spells after a long rest, as normal
You are correct, the total number of prepared spells available for druids are Druid Level + Wisdom Modifier. So when you level up, the total number of prepared spells will increase, either just by one (the level increase), or by more (If you get an attribute point increase with your level up, which increases your wisdom modifier).
However, you pick which spells are prepared after a long rest. So even though you have leveled up, and tracked every other benefit to leveling up, you still have to take a long rest to replenish your spells and prepare new spells (or keep the spells you had prepared since your last rest). This also means that you can prepare a whole new set of spells after another long rest. The only restriction is that you have to prepare all of your spells at one time, and only after a long rest.
To answer your last question, the total number of spells prepared is for all of your spells, chosen from the entire Druid spell list. You can only prepare spells that from spell levels you are able to cast. (For example, if the highest spell level you can cast is level 4, you cannot prepare any spell level 5 spells). You still follow the number of spell slots per level for each spell level according to your character level.
So you may be able to prepare say, 10 spells total. But you can only cast 4x level one spells, 3x level 2, 2x level 3 spells, etc., or how many it says under your character level on the druid level chart in the PHB.
... but you only get to select a small number of them to actually be available for you to cast (prepared). The ones you select must be of a level for which you have spell slots (as if you were a single-class Druid if multiclassing is involved)
(emphasis mine)
You prepare the list of druid spells that are available for you to cast, choosing from the druid spell list. When you do so, choose a number of druid spells equal to your Wisdom modifier + your druid level (minimum of one spell). The spells must be of a level for which you have spell slots.
You can also change your list of prepared spells when you finish a long rest.
So, after every long rest, you decide if you want to prepare a new set of spells from the entire Druid spell list to essentially be your "known spells" for that day. If you don't make a new list, you use the one from the previous day.
If you have leveled up since your previous long rest, you may want to change your list, if only to add the 1+ new spell you've gained access to with your new level ("Wisdom modifier + you druid level") and possibly change any to higher level spells if you have acquired new spell slots.
There are some highly upvoted answers here already, but I don't feel they've addressed the misunderstanding directly enough:
do you do this every level and have that many prepared spells to choose from each level?
No, you do not. As a druid, you can prepare spells (or change your list of prepared spells) every time you finish a long rest. The number of spells you can prepare is equal to your druid level plus your Wisdom modifier, and you can choose from the entire druid spell list, provided you only choose spells of levels that you have spell slots for.
This is different to, say, a sorcerer, who gains spells each time they level up. A sorcerer never prepares spells; they learn them when they level up, and can then always cast them. A druid never learns spells, they prepare them after a long rest, and can then cast those spells until they prepare a different set the next time they rest.
So, if you're a level 7 druid with a Wisdom modifier of +3, you can prepare 10 spells. This means that each time you finish a long rest, you pick 10 spells (of 4th level or lower, because that's what you have slots for) and those are your spells for the day. The next time you finish a long rest, you can, if you wish, wipe away that list of 10, and pick a new set of 10 spells (which can include some of the same ones as before, if you want).
When you gain a level, you become an 8th-level druid with a Wisdom modifier of +3, so now you can prepare 11 spells. Same as before, but now you can choose 11 spells instead of 10 each time you finish a long rest. Now, at 8th level you get an Ability Score Improvement, so you might add to your Wisdom, so that your modifier becomes +4. That would allow you to prepare 12 spells. Again, exactly the same, but now when you finish a long rest, you can select 12 spells to have as your spells for the day.
When you level up again, you're now a 9th-level druid with a Wisdom modifier of +4, which means you can prepare 13 spells, and you now have a 5th-level spell slot, so the spells you choose can be up to 5th level.
Clerics, druids, and paladins have access to their entire class spell list, and prepare spells after a long rest. Bards, sorcerers, rangers, and warlocks learn spells when they level up, and then have that fixed list until their next level. Wizards are kind of in between, in that they add spells to their spellbook each time they level up, but they prepare spells from their book each time they finish a long rest. Do check how a classes spells work when building your character.
