What is "radio firmware"?
Radio-Firmware provides the lowest level hardware access to your device. It is specifically tailored to the chips used, so to say. If you brick this, you're usually done with your device, as there's no way of communicating with the hardware without it.
You can think of "radio firmware" as either a "BIOS" or a "hardware abstraction layer", providing a defined interface to the device's operating system. In fact, the "radio firmware" has nothing to do with Android (or whatever is running on the device) -- as the BIOS on your computer doesn't care whether you install Linux or Solaris or whatever.
- device-firmware: this usually refers to the Android system as such. See its tag-wiki for a lot more details.