From 1d4chan

Acronym of "Read As Written" or "Rules As Written", used in the gaming community when discussing literal interpretations of a rule, or rules, as opposed to other methods of interpretation. This is most commonly used when looking for exploits and loopholes in the system: where a sensible player or Game Master would change, ignore or skip the rule making it work reasonably while still maintaining the spirit of the rule itself, RAW often causes feedback loops that create unusually high results or even infinite numbers (Pun Pun, Peasant Railgun, etc) due to unforeseen balance issues. In games where balance issues aren't quite as severe, RAW is generally used to settle disputes, as it's much easier to prove what is and isn't written down than it is to prove what it was the authors intended. Even if everyone at the table agrees that what is written down isn't what was intended, it's rather more difficult to arrive at a consensus as to what was intended, so it's often easier to just go with what you can see.

RAW sometimes descends into 'Rules As I See It' or 'Rules As Benefits Me'

This happens in the real world, too. Real-life rules lawyers are called...um...lawyers...but unlike rules lawyers, real lawyers get paid hundreds of dollars an hour to skub for their clients.