A Raw image data file is akin to a an exposed frame of film that can't be seen as an image until it is developed.
A JPEG image file is akin to a print.
As far as editing either type of file, the big issue is the bit depth of the file and the ability to edit non-destructively, like Kerbouchard mentioned.
A Raw file is captured by a DSLR camera as a 12-bit or a 14-bit depth file, and a DSLR image sensor initially records
every image as a Raw image data file. A JPEG image file only has an 8-bit depth.
So? WTF does that mean?
A 12-bit depth can render 4096 gradations of tone. A 14-bit depth can render 16,384 gradations of tone. An 8-bit depth can only render 256 gradations of tone, which is why a JPEG file has so little, if any, editing headroom.
Consider that your camera's image sensor record at least 4096 gradations of tone, but to make that a JPEG it has to discard all but 256 of thosetonal gradations. A lot of the file compression JPEG accomplishes happens right there by throwing away the vast majority of the color information the image sensor recorded.
Why spend hundreds, or thousands, of dollar on a DSLR camera that can record 16,384 gradations to tone to throw away all but 256 of those tonal gradations
every time you release the shutter?
But, since a Raw file is a frame of exposed film, every frame made when the shutter is released has to be converted/developed to an image that can actually be seen.
When you shoot Raw the imasge displayed on the rear LCD is actually a small JPEG embedded in the Raw file so the camera has
something to show you.
Just a couple of days ago I posted a link about parametric (non-destructive) image editing that apparently few bothered to look at.:
http://www.thephotoforum.com/forum/...-gallery/247922-parametric-image-editing.html