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How do I store assets like masks and layers in an action that I am recording if they were pasted while I am recording the action so that those assets will be available later in the action?
You can't, actions are mostly instruction steps. Some info is stored beyond instruction steps but not pixel data. An action can point to an asset but not store the asset.
What happens when you download and install a 900 MB painting action?
It can't be 900 MB plain text instructions.
There must be lots of assets in there, that's why it's 900 MB.
Does the action create folders in the PS install files and dump the assets there, then retrieve them via links when needed?
Many actions use / contain lots of masks.
That is pixel data.
Where are those masks retrieved from?