Just to reinforce what dj_paige Has explained. The catalog is the controlling file within Lightroom. It keeps track of where all of your images you have imported are located on your computer, and it records every adjustment that you apply to your images. In its default state, nothing is ever applied directly to an image. As has been explained, if you choose to write changes to XMP files, then changes will be written to XMP files associated with the proprietary raw files, and will be written to the headers of non-raw files. I don't use XMP file. I rely totally on my catalog. There are some who will argue that doing so can be risky. But, so far, over four different versions of Lightroom, I have never experienced a problem with this workflow. I am going to suggest a series of videos for you to watch that I think will help you better understand how Lightroom works. They aren't long, but I believe they provide good information. Getting Started with Adobe Photoshop Lightroom 5 | Adobe TV
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