He's referring to a piece of software which allows you to reduce the appearance of noise in an image: http://www.neatimage.com/
There are many others--noise ninja is also popular. They're extremely effective!
RAW will be just as noisy because the noise is a result of signal amplification in the sensor--the noise is injected before any in-camera image processing takes place.
Definitely, for two sensors with exactly the same light sensitivity, the smallerone will be more noisy, but it's not just size--a smaller but more efficient sensor could easilly have less noise than a larger, less efficient sensor.
