Originally Posted by Rmpjr7 
Peter- Excellent explanation!-now I understand it (almost)! I just have one more related question-if I open it with the Silkypix software that comes with the camera, then save as a Tiff, have I lost the benefit of shooting in Raw when making adjustments to the Tiff file?
Bob
Well yes. Any adjustment is best done in the converter.
The "benefit" of using raw is the ability to work on the raw file which contains all the data captured by the sensor. This work is done in the raw converter. Some raw converters have more features than others. you will only "lose benefit" by using a raw converter with fewer features, or not applying any settings in the raw converter.
Once you have set WB;exposure;contrast;gamma adjustment;colour adjustment;capture sharpening/noise reduction in the raw converter you should not need to change those settings again so you can save the image as a TIFF or jpeg. If you want to do "selective" adjustment to a part of the image you can now do that in PSE or other software.