Extract from Adobe Lightroom 2 – The Missing FAQ

Think of it this way… did you ever play with colored modeling clay when you were a child?

Imagine you’ve got a ready made little model, made out of a mixture of different colors, and you’ve also go separate pots of the different colors that haven’t been used before.  Yes, you can push the ready made model around a bit and make something different, but the colors all smudge into each other and it’s never QUITE as good as if you use the nice fresh separate colors and started from scratch.

Your JPEG is like that ready made model – it’s already been made into something before.  You can take it apart and change it a bit, but if you try to change it too much, it’s going to end up a distorted mess.  Your raw file is like having the separate pots of clay – you’re starting off with the raw material, and YOU choose what to make of it.

So yes, editing JPEGs is non-destructive, in as much as you can move the sliders as many times as you like and the original file isn’t destroyed in the process.  But when you do export to a new file, you’re applying changes to ready-made JPEG image data.  If you’re working on a raw file format, you’re making a single adjustment to the raw data, rather than adjusting an already-processed file.

You’ll particularly notice the difference in changing a white balance or rescuing a very under or over-exposed photo.