Ian explained it pretty good there.
With RAID the hard disks are connected to a controller which performs the RAID applications. This can either be an onboard controller within the motherboard or a seperate PCI controller card.
Most commonly used is RAID 0 which is basically two disks seen as one by your OS. Ideally the two disks should be the same size, type and made by the same manufacturer. Writing to two disks as one increases performance, notably speed.
Of course if one disk crashes, even though the other is physically OK, you lose all your info. There again, if you have your OS on one HDD and that crashes, it's much the same thing.
I have two RAID 0 setups, one with two two x 35Gb Raptors, it's quite nippy, and the other with two x WD 120Gb SATA drives, giving me 240Gb that runs very well.
The other most commonly used RAID setup is RAID 1, which is basically two disks the same, one has the usual on it, the other provides a constant backup. So if main disk fails, you still have everything saved as a mirror.
If you use four hard disks you can have RAID 0 & 1 on the same controller which is the best of both worlds but a tad expensive.
Of the other RAID setups, I know nowt.