Very few ancient texts come from excavations. A few very minor papyri finds have produced new texts, but the vast majority of ancient texts come to us via the manuscript tradition: essentially, ancient texts were copied and recopied dozens of times from the end of antiquity down through the Renaissance. We have very very few truly "ancient" texts, and there is a "dark" period from the end of antiquity (the 4th century CE) down to the early 9th century CE from which we have virtually no texts. Starting in the 9th century, we have a few texts, and then many more from the 10th century, and then even more than that in subsequent centuries. Those early 9th- and 10th-century texts were copies themselves of even earlier versions, now completely lost, which were themselves copies of copies of copies of even earlier versions, also lost, stretching back into the late Roman period. You get the idea. We do have papyri, ancient paper with writing, but nothing like whole books. It is mostly fragmentary, and mostly comes from Hellenistic and Roman Egypt. Many fragments indeed do contain bits of Homer, but the text as we have it as a whole comes from the copying tradition, not from archaeological finds of ancient paper.

For Homer's Iliad, we have lots of manuscripts from the early medieval period onwards: nearly 200, which is an embarrassment of riches when it comes to ancient texts' manuscript traditions. Some other texts survive by just a single manuscript, like the collected poems of the Roman neoteric poet Catullus. Had some disaster befallen that lone manuscript in the early medieval period, the modern world would have no Catullus poems at all.

Probably the "best" early manuscript of the Iliad is the 10th-century "Venetus A" of Venice. Like all the others, it is a copy of a lost earlier version, but it is a very nicely made and very carefully produced copy. Many of the manuscripts preserve not only the Greek lines of poetry themselves, but also the scholia, which are notations written by ancient scholars, sort of like footnotes. These scholia were dutifully recorded and recopied along with the Greek poem itself. Many of the manuscripts often include running prose translation of the Greek lines, sometimes sandwiched between the lines.

The various extant manuscripts of Homer form a sort of family tree, with a few primary copies spawning several descendent copies with minor differences. The primary copies are not identical, but similar in content for the most part: sometimes the extant copies disagree or have variant readings for particular lines or sections. Sometimes whole chunks are omitted from this or that manuscript. Sometimes, we get lucky and we find ancient papyri which have lines of Iliad that are slightly different from the Iliad we have preserved via the manuscript tradition. It is usually not anything drastic, but little changes to verbiage or adjectives and the like.

What I have described is the same scenario for any ancient text, be it a play of Sophocles or a book of history by Tacitus.