How do I update the documentation on someone elses module? I want to update the documentation on the Agenda module on Drupal to provide a bit more clarity on how to get it set up.

I have contacted the author and he said great!

How do I do this on drupal.org?  I see the code can be changed via git, is the documentation part of the git repo?
Documentation pages on drupal.org are normal Drupal nodes. You need special permissions in order to edit these nodes. There is documentation on drupal.org about how to contribute to documentation.  

If the module in question includes a README.txt file, then you can submit a patch to the module maintainers that includes the updates. If the module doesn't have a README.txt file, then submit a patch that adds one.