Internal gears, such as the one on this model Raleigh Sports, are contained inside the hub of the rear wheel. This makes them generally more reliable than derailer gears, especially for bicycles which are used in wet or dirty conditions because they are protected from moisture and grit by the hub. Another advantage of internal gears is that, contrary to standing shifting mechanisms, which require the rider to be pedaling to shift, the internal gears can be shifted even when the bicycle is stopped, an especially handy feature in city traffic requiring frequent stops.
This bike has a Sturmey-Archer brand hub, which was in fact built by Raleigh as well under that particular name. Raleigh was good at streamlining and internalizing much of the manufacturing process, creating a good many parts in house. In fact, the famous Brooks saddles, still considered one of the premier saddles in the world today, is another Raleigh house brand.