|Red Hat Enterprise Linux 4: System Administration Guide|
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There are two possible RAID approaches: Hardware RAID and Software RAID.
The hardware-based array manages the RAID subsystem independently from the host and presents to the host only a single disk per RAID array.
An example of a Hardware RAID device would be one that connects to a SCSI controller and presents the RAID arrays as a single SCSI drive. An external RAID system moves all RAID handling "intelligence" into a controller located in the external disk subsystem. The whole subsystem is connected to the host via a normal SCSI controller and appears to the host as a single disk.
RAID controllers also come in the form of cards that act like a SCSI controller to the operating system but handle all of the actual drive communications themselves. In these cases, you plug the drives into the RAID controller just like you would a SCSI controller, but then you add them to the RAID controller's configuration, and the operating system never knows the difference.
Software RAID implements the various RAID levels in the kernel disk (block device) code. It offers the cheapest possible solution, as expensive disk controller cards or hot-swap chassis  are not required. Software RAID also works with cheaper IDE disks as well as SCSI disks. With today's fast CPUs, Software RAID performance can excel against Hardware RAID.
The MD driver in the Linux kernel is an example of a RAID solution that is completely hardware independent. The performance of a software-based array is dependent on the server CPU performance and load.
For information on configuring Software RAID during installation, refer to the Chapter 10 Software RAID Configuration.
For those interested in learning more about what Software RAID has to offer, here are the most important features:
Threaded rebuild process
Portability of arrays between Linux machines without reconstruction
Backgrounded array reconstruction using idle system resources
Hot-swappable drive support
Automatic CPU detection to take advantage of certain CPU optimizations
A hot-swap chassis allows you to remove a hard drive without having to power-down your system.