Can you explain to me how raid reduces your chance of failure? *honest question* I just had a friend build me a computer (AMD quad core, 16gb ram, USB 3.0, etc.) and I ended up using one of my old hard-drives plus another I had laying around (both 1TB WD's) just to get the computer done because it sucked up more money than I had anticipated. Anyway, with 2 weeks one of the drives failed :/ I have the RAID setup just to have a carbon copy of my first drive; in case anything ever went wrong. And in this case; it's served it's purpose in perfect timing. For the record I also have another 1tb HD in the case that I use for back up storage. I know that I need 3 new hard-drives (probably going to do 3x2 for the raid and a 3tb for the backup) but I'm starting to think I'm doing this wrong.
RAID (redundant array of independent disks) doesn't really protect from "failure", which is sort of a bad word for it- it does, however, protect against downtime. It will enable you to still remain productive even though a critical system device has failed. It's the same line of thinking that gives you two headlights on your car. If one fails, you still have another to get you home at night. However, if both go out, you can't drive.
There are many different types of RAID configurations. The one you're using (sounds like RAID1) is just basic mirroring- whatever goes on drive one copies over to drive two. Because of this, if one of the drives fails, you'll still be able to work on your computer, as you experienced, as you have a complete copy of all your files on the other drive. Your computer sees this and starts using the "good" drive automatically. Once you replace the bad drive, the computer will typically "rebuild the array" (ie, copy all the data over to the new drive) so that they both have the same data again.
There are many different types of RAID. Some are performance-based, some are redundancy-based (which we are discussing here) and some are combinations of the two (typically in business environments).
As far as your comment about using your third hard drive as a backup, this just makes me a little nervous, assuming you're talking about a third internal drive. When considering a backup solution, always think about the ways a backup may be compromised. If you keep a third hard drive inside the computer, where will your data be if someone steals the computer? What about if you get hit by lightning and the drives get fried? In most instances, you'll be fine. The likelihood of all the drives going down at once is very low. However, a "very low" chance at losing everything you've ever worked on is still unacceptable- make sure you have a bulletproof archive stowed away somewhere at the very least, even if it's just unprocessed raw files that you dump onto something and put somewhere safe.
For this reason, I strongly suggest you, at the very least, keep an off-computer copy of your data on a separate device or media. Using an online backup is a great option- many services offer yearly subscription plans for approx $50-60/yr that will give you a bulletproof archive that always runs in the background and keeps you up to date. You can also use external hard drives or burn to Blu-Ray if you'd rather do it yourself.