RAW is the "raw" (hence the name) data from the camera's sensor, it is not compressed in any way (therefore you get no "compression artifacts") nor is it processed by the camera's built in processor (the DIGIC processor by Canon for example) so theres no added saturation or sharepening. Raw files are almost 2x larger or more depending on the camera, but are still smaller than an uncompressed tiff.
The advantage of shooting in RAW include:
1) being able to enlarge the picture (interpolate etc) larger than a JPEG since it is not compressed
2) having A LOT more createive control over it, one can tweak the channels individually, saturation, basically change the entire picture via a RAW converter such as what is provided with your camera (canon/nikon/et al) or through Photoshop's (CS, a version 7 with an update) built in RAW converter. There is a more "pro" RAW converter called Capture One Pro (by Phase One) that is available for mac, that allows you a bit more control over images.
Basically unless you're an amateur that likes to have total control over his/her pictures, or do photography for a living, then there is no need to shoot in RAW all the time. But if you find yourself enlarging JPEGs a lot it would be good to shoot in RAW. That being said, shooting in RAW, transfering the files to your computer, changing settings, and converting to a different format, then saving---well all that takes a lot more time than just saving a jpeg to your hd.
Think of RAW as the "digital negative" that hasn't had anything done to it in the printing process.
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