There are two formats that you can choose to photograph in: JPEG and RAW.
A RAW file is a proprietary file that contains all of the information captured by your camera’s sensor. A JPEG is a standard, compressed image file that’s ready to be printed or shared.
When you set your camera to JPEG mode, the camera applies its own white balance, sharpening, constrast, and brightness for the photo and saves an image file to your memory card. On the other hand, in RAW mode with camera will save all of the raw data picked up by the sensor and leave it for a computer to process white balance, sharpenness, constrast, saturation, brightness, etc.
Shooting in RAW allows you to make many more adjustments to your photos without sacrificing quality. While a JPEG loses quality with every edit, processing a RAW file only changes the instructions with which you want that RAW file processed. Sharpening and noise algorithms in software like Adobe’s Lightroom and Apple’s iPhoto and Aperture may also be more advanced than your camera’s firmware, and as these algorithms improve in the future, RAW files can be re-processed for better results.
RAW files contain at minimum 8 bits per color (most are 12 or 14) while JPEGs contain exactly 8 bits per color – this greatly increases your ability to change highlights and shadows. RAW files allow you correct over- and under-exposed images.
The disadvantages of shooting in RAW are that you need software on your computer to process the files to create images, and RAW files take up larger amounts of space than the compressed JPEGs. This means that you’ll need a greater storage capacity to store more pictures, and your burst mode may not be able to take as many photos in succession as RAW (the bottleneck is how quickly files can be written to your memory card, and RAW files are larger).