You got to have 3+ drives first off. The data on the drives are striped across all drives as is the parity data. There is another type of raid that puts all the parity data on only one drive unlike raid 5. In case of a failure you can still operate as long as only one drive fails. Say you have three drives installed, one fails, the raid knows what the third bit would be based upon the other two bits.
Does that make sense?