Have you ever taken a picture and you could see what it looks like in your mind. You took the negative or digital image to get printed and it came out looking like another picture? I always pick on
Walmart or your local drug store, but the reason is the processing machine is making assumptions for you in what the picture should look like. It is going to try to balance the exposure and the light and the color. That is what jpeg does in the camera when you take the image. The camera uses a formula preset as to how the image should look. Yes you can change somethings but most of the decisions are made for you by the camera and are hard coded on the image.
I was never more dissapointed when I went to Hawaii about 12 yrs ago before digital. I took so amazing shots of the black sand beach. I took them to Walmart and the beach came back dark brown.
In RAW the camera takes all the info available and stores it unprocessed. That is subject to the limitations of the sensor and the megapixels of the image. That is why RAW images are so much larger. Then when you "process" them in a software program you can adjust the image in many many more ways. A great thing about RAW is that if you alter it, it always keeps the original image for you.
I used to shoot in RAW and JPG. It just took more space. I have also gotten far more aggressive in deleting those images that are not really good! I used to treat them all as if they were my children.
One word of caution!
You will see some on this and other boards say do not be as concerned about getting a proper exposure in RAW because you can fix it in post production. That is really a bad approach to take. As you get better as a photographer, you should always try to take the picture you want within a 1/3 of a stop of what you want. Then you have much more correct info to make the image what you want it to be. If you are adjusting your images 1-3 stops then you really need to practice with only one caveat.
One of the first rules of photography is to get the shot. If your child is walking across the stage graduating from whatever and the lighting sucks and you know you have about 2 seconds to get that once in a lifetime, take the best picture you can. Fix it later to the best of your ability. If you want the ghosts in HM then you can ride the ride over and over again to get it. Then you can play.
When you get your DSLR turn it to RAW immediately, buy bigger cards, and as Mark so greatly describes, bake a lot of cakes!
Care to give a summery?
You have all been so helpful! I'm getting really excited about getting a DSLR. I was thinking of getting one at the end of the year, but I don't know if I can wait that long. I'll have to see what I can do about scraping up some extra $$$. 
) 2) our cameras are set up to show us exposures for jpg rather than raw so while the histogram, clipping indicators etc( thinking even the newer highlight whatever you call them that help you from clipping highlights)are of course useful they are pretty off so you can't use them as gospel. this probably hit me as my highlight clipper is someitmes blasting away in my camera then when i to convert it in the computer,it's fine or even leaning toward underexposed which always puzzled me.
