Overview: editing RAW files
RAW files produce the best photo editing results because they contain about four times the image data of an 8-bit JPEG file. But this extra size can be annoying as it uses up more hard drive space, files can't be emailed, and, initially, they look rather drab compared to a JPEG file. That said, some quick editing in Elements' native Camera RAW utility will usually produce an image that looks a lot better than most JPEGs.
One aspect of RAW files that might confuse beginners is that they can only be opened/processed using the Camera RAW utility, which is quite separate to the Quick/Guided/Expert edit modes. It's a bit like having a specialist application within the parent application, Photoshop Elements Photo Editor. If you double-click any RAW file icon, it has to open in the Camera RAW window within Elements rather than opening inside the Quick, Guided, or Expert workspaces (double-clicking any JPEG, TIFF, PNG, or PSD file will open it...