Sharpening with Camera Raw
Pages: 1, 2, 3
A sharpening value is automatically applied to a RAW file when you open it in Camera Raw for the first time. More often than not, the default Camera Raw sharpen setting works pretty darn well. There are good reasons for this. First, Camera Raw automatically applies a sharpening factor based on relevant data specific to a particular digital camera. Second, sharpening occurs only in the luminous channel, thereby reducing the chance of unwanted artifacts. Third, Thomas Knoll, a certified genius and creator of Photoshop, built the Camera Raw sharpen algorithm from scratch.
Of course, if you have the time or inclination, you can tweak the Camera Raw sharpen settings and apply your custom settings to other images taken with the same digital camera.
For an example of how to adjust the sharpness setting, I'll use the image in Figure 2, which has a combination of detail (trees) and continuous tone (sky). I want sharp, clearly defined branches, but I also want to avoid adding noise or artifacts to the sky.

Figure 2: I want to define the branches without adding noise to the sky.

Figure 3: I zoom in on a section that has both detail and continuous tone.

Figure 4: The Camera Raw Detail tab.

Figure 5: I start with the Sharpness slider set to 0.
Remember, when Preview is deselected you see a representation of your image determined by Camera Raw settings applied when the file first opened and before you changed anything. This means if Sharpening is set to 25 at Camera Raw startup, then when preview is deselected you are actually viewing your image with some sharpening applied.

Figure 6: I move the slider all the way to 100 to get a sense of the other extreme.

Figure 7: I finally arrived at 40 for the right balance.