If you use both Lightroom (LR) and Photoshop (PS) you have the option to open a LR file in PS (Photo | Edit In) for additional editing options, notably layers for more specific editing. Elements users have the same option. In LR preferences you can control how this image is recognized after editing. Just remember to “Save” and not to “Save As” in order to have LR retain image management.
In order to retain all of the advantages of both LR and PS my LR Preferences are to remain in 16 bit and ProPhoto and save the files as PSD files. If you prefer to export your images from LR you can modify the final output files in the LR export dialog. You can also “Save As” after having “Saved” the file for LR and put your file into another folder not managed by LR. I do this with files that are complete in order to fit them into my work flow coming out of PS. Doing both may be confusing if you are primarily a LR user.
If you “Edit In” PS when you open an original raw file you get no additional dialog box. LR adjustments to raw are just applied to the file as they would be from ACR. Saved files are new and the original raw remains. But, when you open a psd, tif or jpg file, including layered psd or tif files you have produced by previous editing, you get a selection box on how to handle the file. There are three choices:
“Edit a Copy with LR Adjustments” – will retain any adjustments to the file made in LR, and previously edited PS files, but a layered file will be flattened so you will not have access to your PS layers anymore. A new file is created. This is the best choice for non-raw originals that have been processed in LR as the original file is retained. It is also what happens automatically with a processed raw file sent to PS.
“Edit a Copy” – LR adjustments will not be applied. Choose this to reopen a layered file previously processed, (initial LR modifications intact) but any modifications done in LR AFTER the original edit will not show up. Original tif or jpg files are simply opened as copies without LR adjustments. The result will be a new file.
“Edit Original” – (does not apply to raw files, remember) opens a file respecting its saved state, ignoring subsequent LR processing. Opening a psd or tif does not assume you want to return to the original raw file. A new file is not created, so using this option on an original tif or jpg file will be destructive.
Basically, there are choices to edit the original image or a copy, with or without LR adjustments. If you are working with jpg or tif original files the “Edit a Copy” options are the best.
If you are working with previously edited files saved as psd or tif files with layers, adding new LR adjustments will flatten your file. To work with these in their layered form you have the option to work directly on the file (original) or make a new copy, but with those options LR adjustments made after you saved the work from PS will be ignored.