CAD stands for Computer Aided Designing and CAM stands for Computer Aided Machining. As obvious from their acronyms, CAD software is used to design the artwork, drawings etc. which are further used by CAM software to make tool path for machining.
Any suitable CAD software like AutoCAD can be used to make the basic drawings or CorelDraw to make artistic designs. A scanned image of a drawing could also be imported to CAD software. In cases where direct component is available, 3D Digitizer is used to acquire the CAD image.
What is important for the CNC machine is the CAM software, which works on these designs and makes suitable tool path for machining. Every CAM software comes with a separate driver for various CNC machines so as to generate the appropriate tool path necessary for that machine. All major CAM softwares have a number of drivers with a facility to add more drivers not included with the software.
Normally, CAM software provides facility to modify drawings created in CAD software. Not only that, many softwares have a CAD as well as CAM facility built into one module which is why they are called CAD/CAM software, capable of handling both, the designing as well as machining.
A lot of CAD/CAM softwares are available in the market, which cater to a distinct but broad spectrum of clients. Some examples are dedicated CAD/CAM software for jewellery segment, mould-makers, engravers, product designers having multiples of sub-components and assemblies to name a few.
CAD/CAM software has 2D, 2 1/2 D, 3D machining capability. CAD/CAM software indirectly controls the usability of the CNC machine and hence CAM software suitable for ones application has to be used.