There are many ways to classify or differentiate denim. One of the most important things you can talk about are shrink to fit versus sanforized. I'll not be discussing, if one fades better than the other, or if one is better than the other in general. Again, I would like to say that buying jeans is personal. You have to figure out, what works for you and what you appreciate. Before writing about the two, I would like to correct a common mistake, the difference is not between raw and sanforized. Sanforized can be just as raw as shrink to fit denim.
In the old days all cotton materials -including denim - would continue to shrink after the first couple of washes. They were shrink to fit so to speak. The cotton was untreated, which made the cotton fibers constrict after washing. Therefore the general rule was that the fabric would shrink 10%, meaning you would probably have to go 2" up in the waist and 3" in the length, when buying jeans.
Sanforization is a process to treat the cotton fabric, that was invented by Sanford L. Cluett in the late 1920's. The process was first used by Erwin Mills in the 1930's to make denim for workwear. Shortly hereafter many companies started using the sanforization process and you will often see it advertised on old clothing when the tag says sanforized or sanfor-treated. Many denim companies started using the sanforization process because it could reduce overall shrinkage to about 3%, which meant you didn't have to take shrinking into consideration, thus allowing the consumer to buy the exact size. Levi's however remained true to the shrink to fit denim until the 1970's - and they still make an shrink to fit 501 model in their main assortment (indicated by the XX after 501), plus most of the jeans in the LVC range are made of shrink to fit denim (with the exception of the 505 - and jeans from the Orange Tab range).
Nowadays the denim purists demand shrink to fit denim and there are many rituals connected to it. There are millions of ways to soak your jeans. Some soak them in the sea, some in a bucket of water, some wear them in the tub and the list goes on. Some people prefer to wear their jeans without ever washing them, but that is for the extremists, although recent studies show no health risks concerning the no-wash method.