What am I missing, why do they need to deal with raw or .jpg or anything,
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Robert, what you're missing is that the Eye-Fi is designed mainly to upload your images directly to a photo-sharing web site like Flickr. Uploading to your own computer seems to be a bit of an afterthought. Since the photo web sites generally don't accept raw images, the main feature can't easily handle raw images.
There's no particular reason why they couldn't add support for raw images for local upload only, except that the larger file sizes would make the wireless uploads slower. I don't expect this is a high priority for them, though. It's outside the main focus of the product.