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It's essentially the firmware for...well...the radio hardware. It controls signaling, power, power management, and other things. It's not so much a driver as it is the code that would go on the hardware itself (firmware). It's kinda like the rom that would go in, say, your home router, to put it primitively.
Each version of a radio contains code that can fix problems/defects, as well as configuration tweaks that can affect signal quality, strength, and battery life, as has been explained.
HTC Incredible 2
CyanogenMod - Nightlies
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