Pat,
Boy, you sure ask the tough ones! Basically, RAW format (and there are many schemes used by various camera manufacturers) is the unmodified record of what each pixel the camera's image sensor sees, broken down into red, green and blue or cyan, magenta and yellow elements; one grid of data elements for each of the 3 colors consisting of space for data for each pixel. In other words, if one pixel is illuminated by fully saturated pure green light, that particular green grid pixel data element will have a grey-scale rating of 255. If there is no green light, it will have a value of 0. Similarly, if that same pixel contains 50% saturated red light, the data recorded in the red grid data element will be a greyscale value of 127 (one-half the fully saturated value). Same goes for blue. What you end up with is 3 color grids containing greyscale values for each pixel in the photo. For example, if you shoot at 800 x 600 resolution, the three grids will contain 480,000 data elements each, each containing specific greyscale values for each pixel. It is now up to the camera to interpret and interpolate all this greyscale data to produce the image on the LCD you see after you've taken the shot. Here's where the beauty of RAW format comes in: Because none of the data the camera sees has been compressed or modified in any way, you can import the raw data into a program like PhotoShop and manipulate each pixel INDIVIDUALLY - should you have nothing better to do with your time. The advantage here is that JPEG, for example, usually compresses 8 pixels into one, causing you to lose some image detail and quality to gain more exposures on the same size memory (flash) card. In my case (a 5 megapixel Nikon), a 128 MB memory card will hold 205 standard quality pictures each taking up about 624,000 bytes, whereas shooting in raw mode I will only be able to put 8 pictures on the same card because each one now takes up 16,000,000 bytes of storage space (3 x 5 megapixels + the metadata; explanation follows) The camera also records metadata (data about data) which has information about exposure settings, lens opening, white balance, whether a flash was used, camera type and serial number, and other data for each and every picture. A more detailed explanation can be found here:
http://www.adobe.com/products/photoshop/pdfs/understanding_digitalrawcapture.pdf
Hope that answers your question.