A raster is a matrix of cells that each store a specific value like rainfall, temperature, or elevation. Rasters do not have attribute tables unless one is created, and can contain integer or real number values but not text. Pyramids are downsampled versions of rasters that improve performance by accessing different resolution levels for zooming in and out. They are created individually for each raster dataset. Hill shade effect adds illumination to rasters to enhance visualization by simulating sunlight interaction with the terrain surface.