simply put RAW is just unprocessed data. So you can adapt the data at 16bit level. In other word easily change exposure, white balance etc.
Jpeg has been processed by the camera to the jpeg standard which includes some sharpening etc.
if you shoot raw you have more control over the picture for post editing than you do for jpeg.
try it, shoot two pictures, one in jpeg one in raw then download LR4 trial for free. import them and see how much more control you have over altering the RAW image.
more concise explanation can be found here