Higher end digital cameras let you shoot images in RAW format (as well as the standard JPEG). Images captured in RAW contain more data making it possible to do more extensive editing such as changing exposure and white balance.
Entry level DSLRs offer a good compromise between ease of use and power. Entry level DSLRs can be used in full automatic mode if you want, or you can start to learn more about photography and use controls such as aperture, shutter, ISO and more.
Digital SLRs (also called DSLRs) are the digital equivalent of the old film SLRs. SLR cameras all have interchangeable lenses, and an optical viewfinder that lets you look through the lens and see exactly what the camera will capture when you take a photo.