What does "Render using LR" mean?

Just wondering if someone could explain to me in layman's terms...
I am using LR 2.7, ACR 5.7. Photoshop CS3. I understand that LR is using
the newest version of ACR while CS3 does not have the capability to use ACR
beyond 4.6.
When I choose "Edit in Photoshop CS3" from LR and I have a couple of options
one of them being: Render using LR, what is happeneing to my CR2 file if I
choose this option?
Thank you,
kristin

Simple anwser: Render using LR means, let LR process the raw data. Edit in Photoshop: Let whatever version of Adobe Camera Raw process the data. If the two were on parity (same version, same features and thus same processing), no difference. You wouldn’t even get that message. But ACR is older than LR so LR is telling you this. Newer functionality in LR isn’t available to ACR. In such a case, you want LR to process (render) the data. Just use the Export command and setup what you desire in terms of size, color space, file type, just as you setup your Edit in Photoshop preferences.
Adobe doesn’t force you to have ACR and LR on version parity which is nice. And if not, you are warned of this disconnect in processing the raw data. You could have the older version of ACR do the processing but there is a possibility there will be a visual difference depending on what is ‘missing’ in the functionality in ACR.

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