A raid is similar to a party, in that it is a group of people usually gathered for a united purpose, but is far larger, with the ability to hold up to 40 people. Like a party, the raid has a single leader; unlike a party, however, individual members of the raid can be promoted to "Assistant" status, which gives them the ability to mark targets, invite and remove players as well as rearrange the parties
Certain instances cannot be entered without being in a raid group. However, it's possible to convert a single party into a raid group without reorganizing members in any way, so this is a very minimal restriction and serves more as a warning to those entering.
No quests may be completed in a raid group except for those specially flagged (Raid). Any abilities which affect a party (totems, Warrior shouts, etc.) will still only affect that person's party, and not the entire raid. However, abilities which normally can only be used on party members can be used on anyone in a raid group.