Does camera raw filter actually use raw data?

When used as a smart Filter (On a Smart Object Layer) you work on the same Layer pixels the same image whenever you adjust the filter.   If the Smart Object Layer's Object is a RAW File you can double click the layer smart Object in the layers palette to open the object (the RAW File in ACR) and work on the raw data instead of using ACR as a filter the object will be updated.  If the layer is not a smart object layers  ACR filter would change the layer pixels ever time you use ACR as a filter on the layer so each time you use ACR filter on a normal pixel layer you would be adjusting a different image. 

cutch2222  wrote I was under the impression that once you brought a raw file into into photoshop, it was converted to pixels (hence the necessity of using camera raw to open in photoshop).

I see that files rendered from raw files are sometimes referred to as "pixel" files.

This is misleading, since raw files are indeed made of pixels. I prefer to call these files rendered files.

But if I bring a raw file into photoshop, does using the camera raw filter allow me to access the original raw data? or does it just allow me to use those nifty tools on what has been converted to pixels?

Once the raw file (or more precisely, a rendered copy of the file with raw adjustments applied) has been opened in Photoshop, it is no longer a raw file. So the Camera Raw filter can not access the raw data.

The Camera Raw filter was designed to be able to use the camera raw interface with non-raw files, like Tiff, PSD, Jpg, etc.