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Whenever I make an edit to a RAW photo in Bridge, even something simple like rating it or rotating it, it generates an XMP file next to the original photo in the source folder. The original is not merged with the XMP file, i.e. the original photo in its folder will not show any edits or being rotated, only in Bridge. I've tried going to Edit > Camera raw preferences > File handling and changing the sidecar settings to each 'Embed xmp in dng' and 'Ignore sidecar files' but I still have the same problem. Anyone else experience this?
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You could covert your files to Adobe DNG format. All edits are then saved within the files without the need for sidecar files.
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In the "olden days" there was an option to use a database rather than XMP files with camera raw. That option no longer exists. If you are using native raw files from your camera then camera raw will create those XMP files. As has been noted, the alternative is to convert your files to DNG.
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Adobe treats proprietary raws as 'read only' so the edits and such much be saved somewhere. For ACR, that means sidecar files. OR you can, as other's have suggested, use DNG which isn't proprietary, so Adobe will write this into that container, as it can do with TIFF, JPEG etc. There are a number of advantages to DNG like this and more, and a few disadvantages so you should study up on them and make a choice.
https://www.cnet.com/news/adobe-offering-new-reasons-to-get-dng-religion/
http://digitaldog.net/files/ThePowerofDNG.pdf