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It is the image file that contains minimally processed data from the image sensor of either digital camera (or film scanner, image scanner). You can imagine it as an unvarnished negative. There exist lots of formats (.dng, .CR2, .NEF, .ORF, etc.).
As the raw format contains much more data that can be used very well in post-production of photography, you can better process underexposed and overexposed places in photo without greater loss in quality or for example with better colour tuning options.
While in RAW format only one colour channel is assigned for each pixel, in JPEG format each pixel has complete colour information. It means that RAW format gives you much better postproduction options. The disadvantage of RAW is much larger data file. When you shoot in JPEG format, image is compressed and some information is lost and non-recoverable. That’s the reason why most photographers prefer capturing RAW images and editing them later. If you mean it seriously with taking photos, use definitely RAW.
You can use many freely available graphic editors (for example): Darktable, DigiKam, IrfanView, Photivo, Raw Therapee, Stepok´s RAW Importer
Or you can also use professional graphic editors (we recommend): Adobe Photoshop CC, Adobe Photoshop Lightroom, Capture One Pro 11, Zoner Photo Studio X
There are some programs for mobile devices, you can download it at App Store or Google Play: Afterlight, Darkroom, Lightroom Mobile, Snapspeed, VSCO