RAID is a single acronym that actually means a bunch of different things. The only common thing about the acronym is that all of them talk about using a bunch of differerent drives in some shared role.
There are three broad features of RAID:
1. Speed. IF you can get all the drives working together at the same time, then your overall speed increases beyond what a single drive can do at the time.
2. Capacity. By aggregating all the drives together in some logical grouping, you can have what looks like one huge drive to applications.
3. Redundancy. In every mode other than RAID 0 and JBD, you'll have some duplication of information among drives. This will let you keep on going and recover if any one drive fails. In some variations, you can have more than one drive fail.
RAID 5 is in theory a combination of all of the above, with a pretty cool and efficient solution for redundancy. In practice however, it takes several drives and good hardware to get the performance up.
RAID 0 gives in theory the best performance with no redundancy and the greatest data risk -- because you lose everything if you lose any single drive, your data risk is higher than with single disks.
RAID 1 gives good redundancy and simplicity, and potentially increased read performance, but with high storage cost.
For the most part, my personal advice would be that if you're only dealing with a couple of 100's of GB's, then you're likely to be better off not getting into RAID. (Modern HD's are pretty fast, and performance can be complicated.)
If you're dealing with several 100's of GB's, and putting together a reliable storage device, then you should probably be using RAID 5, or higher. I'd further advise always keeping the OS on a separate drive for simplicity and stability. Finally, I'd echo the advice that RAID is not in itself a backup, and you should have a separate backup of your important stuff -- esp. data that you've created yourself.
