If I open a smart object, add a layer I want to preserve and hit save, I sometimes get this error:
"Can't save this document back to its original file format. Flatten layers and discard extra data as necessary then choose File > Save again. You can save the file using File > Save As, but the associated smart objects will not be updated."
Such a self-aware error message! The devs seem to know exactly what I want to do and are offering workarounds rather than just doing what I want. So my suggestion is: do what I want! When I press ctrl+s, save the multi-layer smart object as a psb instead of a png/jpg, then replace all instances of the existing smart object in the original document while maintaining their translations/styles/filters/etc.
Part of my confusion is that dragging a png or jpg into my file results in a png/jpg smart object, whereas if I ctrl+v paste it in then right click layer > Convert to Smart Object, I get a psb smart object. I do both interchangeably, and it's hard to know which format a smart object is before I crack it open and do a bunch of work on new layers I intend to preserve, only to hit this annoying error message which basically says "nah we know what you want but we're too lazy to do it". And it can be a LOT of work to go back and replace smart objects if they've been duplicated, scaled, styled, masked, filtered, and buried in groups.
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