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Some simpler cameras take the light data off the digital sensor, then process it directly into a JPEG image format for storage. JPEG is a compressed format, so there are little tiny bits of image data that get discarded.
With a more complex camera, you can store JPEG images the same way. Or, more likely, you can store them as TIFF format or else as RAW format. TIFF is uncompressed, so no image data is discarded, but it is a much larger file size. RAW is the raw data coming off the digital sensor, so it needs to be converted (on your computer) into one of the more typical formats, TIFF or JPEG. The advantage of RAW is that the converter allows the photographer to "tweak" some aspects of the image such as exposure, contrast, color saturation, sharpening, light temperature, etc.
The advantage of that is that the photographer can tweak the image and then convert it to TIFF or JPEG with less destructive impact as would be the case with direct JPEG. So, I have RAW files coming out of the camera. Those get converted into TIFF for purity. Then some are converted into JPEG after tweaking is finished and it is ready for publication.
If you are only making snapshots for the web, then none of this matters. If you are trying to take an 18 megapixel image and blow it up to 20"x30", then it matters a lot.
--B.G.--
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