The RPG-7 is a very cheap, very simple, Anti Tank Rocket Launcher. It is the last line of defense for an infantry platoon as it is a comparatively short range weapon. It is designed to use a charge to push the rocket out of the barrel, and then a sustainer motor to carry it further to target. In order to penetrate its target the RPG-7 uses a HEAT warhead.
A HEAT (High Explosive Anti Tank) warhead uses an explosive charge to propel a liner, usually made of copper, into the target at supersonic speeds. This means that penetration does not decrease as the projectile looses momentum. HEAT is also very efficient at punching through armor, but suffers when dealing with spaced armor, ceramic armor, and explosive reactive armor, the first two passively slowing down the jet, and the later deforming through explosions.
Another interesting point about the RPG-7 is that it is reloadable, which allows the same launcher to fire several rounds, as well as several different types of round. The launcher is heavier and stronger to accommodate this however, compared to the disposable rocket launcher.