What is the difference between RAW and JPEG formats?

The distinction between RAW and JPEG formats primarily revolves around how each file captures and processes data from the camera’s sensor. RAW files retain all the unprocessed data directly from the camera's sensor, preserving the full range of information about the image. This includes details in both the highlights and shadows, enabling significant flexibility in post-processing. Photographers appreciate this quality because it allows for extensive adjustments in exposure, color balance, and other parameters without degrading the image quality.

In contrast, the JPEG format applies processing to the image in-camera. This processing includes compression and the application of sharpness, white balance, and other adjustments, which can lead to a loss of detail and flexibility when it comes to editing. Once saved in JPEG format, some information that could have been retrieved from the RAW file is irretrievably lost.

Thus, the option emphasizing that RAW retains all sensor data while JPEG is processed accurately captures the fundamental difference between these two formats.