When I try to open from within Photoshop, through Open as, then Camera Raw, it lists this extension but doesn't open the file. I need an explanation in a "for dummies" version. This is my second day shooting raw, and I am not familiar with technical terminology and abbreviations found in answers here that deal with opening raw files. I use Photoshop CS4 Version 11.0.2. My camera is Canon Rebel T3i. A Digital Photo Professional software comes with the camera, but I am so used editing my JPEG photos in ACR that would prefer to continue using it for raw files.
The Canon Rebel T3i is supported in ACR version 6.4.1 which, unfortunately, means Photoshop CS5 or better for you: http://www.adobe.com/support/downloads/detail.jsp?ftpID=5104 for some more detail. You may want to consider the upgrade to CS6 or, alternately, getting the latest Lightroom version which will allow you to export to Photoshop while handling the conversion.
You can convert your cr2 files to DNG files. DNG files are openable with anything.
You can convert them using this tool
You need a newer version of ACR, and for that a newer version of Photoshop. An alternative to buying a new edition of Photoshop could be to use raw therapee. If you edit your raw files with raw therapee, you can do further processing in photoshop cs4, if you like. Raw therapee: http://www.rawtherapee.com/
Welcome to the "Photoshop Tax" on getting a new camera body.
The main thing to keep in mind is that RAW is not an acronym, a file format, or a standard. It's merely a file that contains the unprocessed (raw) contents of a sensor data dump. Every camera model has a different RAW file format. The .CR2 files from a 5DMKII are different from the .CR2 files from a T3i. It's not like TIFF or JPEG files in this regard.
So, what any RAW conversion software has to do is to know how to grab the metadata and the image data out of a RAW file for every single camera model. And you can't write to a file format that doesn't exist yet, so RAW files can only be converted by a version of ACR that was written when the camera existed. And Adobe only allows current ACR updates to be compatible with the latest versions of its software.
When you buy a new camera model that was just released, chances are good that if you want to open the RAW file directly, you'll have to update Photoshop or Lightroom to the current version, and then wait until the ACR update that handles your camera's model is released.
But since Adobe knows that forcing updates among its customers is an unpopular thing to do, they have a workaround, which is DNG (Digital Negative). DNG is Adobe's attempt at an open RAW standard. And they have a free DNG converter that is kept up to date with the latest ACR updates, which can convert a camera's RAW files to the DNG format. And all Adobe software--including older versions--can always open a DNG. You may have to convert to an earlier version of DNG if your version of Photoshop is particularly old, but it will work. I was able to use Canon 50D files with PS CS1 by converting the RAW fils to DNG and then opening them in Lightroom.