A PSD file, also known as a Photoshop Document file, is a proprietary file format used by Adobe Photoshop to save and store images with multiple layers, masks, and other elements. PSD files are widely used by graphic designers, photographers, and digital artists as they provide flexibility and control over the design process. This format preserves all the editing capabilities, allowing users to make changes to individual layers and adjust various elements even after the file has been saved. PSD files can be opened and edited in Adobe Photoshop and other compatible software. They are commonly used for creating website designs, logos, advertisements, posters, and other visual assets.