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What are the technical specifications/capabilities of each file format?
Does one type handle certain types of graphics better than the other?
XCF supports saving each layer, the current selection, channels, transparency, paths and guides. However, unlike the native file format for Adobe Photoshop, PSD, the undo history is not saved in an XCF file.
The .PSD (Photoshop Document), Photoshop’s native format, stores an image with support for most imaging options available in Photoshop. These include layers with masks, color spaces, ICC profiles, transparency, text, alpha channels and spot colors, clipping paths, and duotone settings