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PSD is a file format used by Adobe Photoshop for storing images with multiple layers. It allows for detailed editing and manipulation of image elements. PSD files can be easily modified, making them a popular choice for graphic designers and digital artists. They can be saved in other formats like JPG or PNG for sharing.
ICO is an image file format used for storing icons in Windows operating systems. ICO files can contain multiple sizes and color depths of the same icon, allowing the system to choose the appropriate version based on the display resolution. ICO files are commonly used for website favicons and desktop application icons.