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What Is RAW?
The Camera RAW image format contains the image as captured by the camera and then processed minimally to the stage that it can be rendered as a color image by a tool capable of converting RAW images. Typically, the camera manufacturer will supply a piece of software for you to use to make the conversion. Some programs, such as Photoshop CS2, can also complete the processing. In the case of Photoshop CS2, it has a Camera RAW tool that does the preprocessing required to convert a Camera RAW image into a standard format image that can be viewed and printed by most graphics software, including Photoshop itself.
Camera RAW images have different extensions, depending on the cameras with which they were shot. The Camera RAW file format is not a standard format, such as TIFF or JPEG, and the image file itself differs in what it contains depending on the camera used. For example, I use a Pentax *ist DS, which has a file extension of .PEF for raw images; other Camera RAW formats include .RAF (Fuji), .CRW (Canon), and .NEF (Nikon). Because the format depends on the camera, you can open Camera RAW files and save them as other formats, but you can't convert, say, a JPEG file the other way, into a Camera RAW file.
Camera RAW files take much more disk space than equivalent-sized JPEG images (which are compressed using a lossy compression method), but considerably less than equivalent-sized TIFF images.
Most cameras capable of storing captured images in Camera RAW format offer it as one of a number of file format options. For some cameras, however, use only the Camera RAW file format.