Raids groups are a way to have parties of more than 5 and up to 40 people, divided into up to 8 groups of up to 5 players.
The terms "raid" and "raiding" primarily and traditionally refer to PvE raid-specific instances.
Raid instances require playing as a team, and are designed to be the most challenging and entertaining PvE content available in the game.
As party leader, a player can convert their group into a raid group by accessing the "Social" Panel, selecting "Raid", and choosing "Convert Group to Raid."
You can do this also by right-clicking your character portrait and selecting "Convert Group to Raid" from the menu.
From then on, any new players invited to the group will join the raid group (up to a maximum of 40).
This requires at least 2 people (ie. a party). A person alone cannot form a raid group.
While in a raid group, players do not receive credit for completing quest objectives unless the quest calls for a raid.
Players also receive an experience reduction for any mob killed while in a raid group.
These are to prevent players from creating very large groups in order to complete normal quests or other game content intended for parties of 5 or fewer.