What is actually inside
A PSD keeps the document as a stack of independent layers, each with its own pixels, opacity, blend mode, and optional mask. On top of that it stores adjustment layers that describe an edit rather than applying it — a curves adjustment is a set of parameters, not baked-in pixel changes — along with editable text, layer effects, smart objects that keep their original source, and the full editing history structure.
This is why PSD files are large and why they are worth keeping. The finished JPEG is a rendering of a decision; the PSD is the decision itself, still changeable.
The flattened preview, and why other programs can open a PSD
Photoshop writes a flattened composite of the whole document into the file alongside the layers. That composite is what most non-Adobe software reads — it is the reason a PSD can be previewed in a file manager or imported by an image viewer that knows nothing about layer effects.
It also sets expectations correctly. When another program opens a PSD it is usually showing you the composite, not interpreting the layer stack. Blend modes, smart filters, and layer effects frequently do not survive a round trip through third-party software, so a PSD edited elsewhere and returned may not match.
PSD, PSB, and the size ceiling
PSD tops out at 30,000 pixels per side and 2 GB. Large panoramas, high-resolution print artwork, and heavily layered composites hit that ceiling, at which point Photoshop switches to PSB — Photoshop Big, sometimes called Large Document Format — which raises the limit to 300,000 pixels and 4 exabytes.
PSB is otherwise the same format, but support outside Adobe tools is noticeably thinner. If a collaborator cannot open your file, checking whether it is actually a PSB is a good first move.
Converting PSD files
Converting a PSD to PNG or JPG flattens it — the layers are gone from the output, and there is no way back. Always keep the PSD. Export PNG when the image has transparency or hard-edged graphics, and JPG when it is photographic and destined for the web or email.
Browser-based conversion reads the flattened composite Photoshop already stored, which is why it is fast and why it reflects the document exactly as Photoshop last rendered it.