I've scoured the archives and the Missing Manual book for an answer. I shoot RAW (Canon T2i) and then tweak the photos in the RAW window that opens when I open the PSE10 Editor. When I'm satisfied with a photo, I save it with a name and stick it in a different folder in order to create an online album to share. It saves automatically with a .psd extension, and I have to convert them to jpg to post them in the album. Occasionally, but not every time, an icon that looks like a blank piece of paper appears in the folder or on my desktop, with the new name and the .xmp extension. Normally, since I have no idea what it's for, I delete them. But is there any reason why I should save them? I don't get into the hardcore stuff.
The xmp file saves all your RAW edits. If you have saved it and you open the RAW image again all of the sliders will automatically be in their saved position. If you never intend to open the RAW file again then you wouldn't need to save it. It all depends on whether you might like to go back and re-edit your picture sometime in the future.....perhaps to try new software etc. Other members might have additional information to consider.
Sony a6000 Lenses...10-18, 18-55, 55-210, 35, 85 LR, PSCC NIK Suite OnOne Photo RAW 2020 Topaz: Adjust, Clarity, Simplify, Clean, Lens Effects, Remask, Impression, Star Effect, Restyle and DeNoise A.I. Gigapixel
The only thing I would add to what Helen has already mentioned is that if you delete the xmp file and then afterwards in the future open the raw file you will see the raw file as you did the very first time you opened it in ACR and with all the adjustment sliders in their default positions, as implied by Helen's post but might not be clear to all.
Another thing to realise is that the xmp files are "attached" to their respective raw files and so if you delete a raw file that has an associated .xmp file, either directly from your computer's OS or via the PSE Organiser, its .xmp file is also deleted automatically. You are not left with orphaned and redundant .xmp files when you delete raw files.
These are both excellent explanations that I actually understood! Thank you both. I don't see losing the RAW edits as an issue. As I get better at this, starting over on some photos is probably a good thing.