Editing in Lightroom is using your RAW image and editing it using the Adobe Camera RAW engine. This RAW image contains all the information that your camera sensor has captured, so you can bring out the maximum detail, especially with exposure, highlights and shadows adjustments. When you transfer this image over to Photoshop the RAW image data can be lost unless you transfer it as a Smart Object. Similarly, this RAW image data can be lost when transferring the image back to Lightroom, or doing a further edit in Photoshop at a later time.
How to Link Lightroom and Photoshop
Using Linked Smart Objects is the key to linking Lightroom and Photoshop together because Lightroom and Photoshop process RAW files differently. If you just use the Edit in Photoshop Menu the RAW data is lost. However if you use the Lr Open as a Smart Object in Photoshop Menu, then Lightroom and Ps Camera RAW Filter will be linked. However, this link is only one way, from Lightroom to Photoshop. Any changes you make in the Ps Camera RAW Filter will not transfer back as Lightroom RAW settings, just as a flattened image. (Ref).
Linking Photoshop to the same RAW file can be done in two ways. Either go to the Menus and select Layer > Smart Objects > Convert to Linked ... Or right click on the Layer with the Smart Object on it (Don't click on the actual Smart Object itself) and select Convert to Linked ... . This brings up a Finder Window where you need to find the original RAW file. Click Save and replace the original RAW file with the one in Photoshop but this is now linked to Photoshop as well as Lightroom. Make sure you have a backup of your original image before doing this in case of problems. (Ref 9:15)
The following settings are important to ensure that the linking works correctly -
Lightroom Preferences Menu for External Editing should have settings 1 and 7 set to .PSD rather than .TIFF to ensure the program links work. (Ref 18:30)
Lightroom Catalogue Settings Menu should have the Metadata setting 2 'Include Develop settings in metadata inside JPEG, TIFF, PNG, and PSD files' checked and 3 'Automatically write changes into .XMP' checked. (Ref 14:15)
Finally make sure you save your Photoshop editing by using 'Save' not 'Save As' to preserve the link. Photoshop will now save a new .PSD file next to the original RAW file. Lightroom will update its Catalogue and show the new file.
If you need to edit this .PSD file in future, select it in Lightroom, select the Edit in Photoshop Menu and chose 3 Edit Original.
