All marked damage is removed from all creatures, and all "until end of turn" effects end. Only the active player has to discard down to his/her maximum hand size. A final check of state based actions will clean up the board state. And if they do anything, or an ability has triggered due to any of the aforementioned things, any waiting triggers are put on the stack, and the active player gets priority, and another clean up step will happen after this one, where all of that will be done again.
514. Cleanup Step
514.1. First, if the active player’s hand contains more cards than his or her maximum hand size (normally seven), he or she discards enough cards to reduce his or her hand size to that number...
514.2. Second, the following actions happen simultaneously: all damage [...] is removed and all “until end of turn” and “this turn” effects end...
Former Rules Advisor
"Everything's better with pirates." - Lodge
(The Gamers: Dorkness Rising)
"Any sufficiently analyzed magic is indistinguishable from science."
(Girl Genius - Fairy Tale Theater Break - Cinderella, end of volume 8)
514.1. First, if the active player’s hand contains more cards than his or her maximum hand size (normally seven), he or she discards enough cards to reduce his or her hand size to that number...
514.2. Second, the following actions happen simultaneously: all damage [...] is removed and all “until end of turn” and “this turn” effects end...
RULES OF MAGIC :
http://magic.wizards.com/en/game-info/gameplay/rules-and-formats/rules