It is crucial that you understand what the Photoshop preferences settings mean in a particular production environment to configure the application properly. Photoshop gives you lots of options for customization. No need to worry; most of them don’t need to be changed. They will be better off as they are.
In fact, it will just work fine even if you don’t change any of the preferences at all. Here I am more interested in optimizing and improving the overall performance of the system and the photographic workflow.
You see options for changing the default consumer settings at many places inside Photoshop often attached to the function or the tool itself that you want to customize. Unlike those customizations, Photoshop Preferences deal with the core functionalities of the application and its performance.
To go to the Preferences command, click on the application menu Edit→Preferences or you can use the shortcut Ctrl + K to access the Preferences dialog box.
Understanding the Photoshop Preferences
Since Photoshop is an advanced editing application its preferences can be overwhelming. So Adobe engineers have grouped them into many categories and under each category, you will find one or more sections. This intelligent organization makes these preferences so comprehensible.
Furthermore, you also have the Tooltips feature enabled here; ready to help you with more words and brief explanation of what each option does. Just hover your mouse over an option and pause for 2 seconds. The tooltips will then appear on your screen.
You can either click on each category tab to access them─or press Ctrl + Up or Ctrl + Down arrow keys to cycle through them.
Here I am not going to discuss every customizable option. I am only going to discuss what can make an impact on the overall performance of the application and the options that can make you more productive in a digital photographic workflow. For every option, Photoshop User Guide is the best place to learn.
Warning
Adobe seems to reorganize the grouping of these options from version to version. If you don’t see an option that you had in the previous version of this application, probably, it’s been moved to a different preference group or it’s been completely removed; since Adobe no longer finds it significant as a customizable user preference for that version.
General Preferences

General Tab groups the options that do not fall into other categories. On the general tab, the options you see are quite self-explanatory. Besides, the Color Picker, HUD Color Picker, and Image Interpolation should be left as is.
Color Picker is how you will be sampling colors from a document or photographic image. You may not want to choose the other color picker to be more consistent and accurate.
HUD Color Picker is how you change the currently selected color to a different color. Here the HUD stands for Heads Up Display. To activate or use HUD Color Picker you have to use a keyboard shortcut: press and hold Shift + Alt + Right Mouse Button. If it doesn’t work make sure your graphics card supports OpenGL or it is functioning properly. Or check whether your graphics card is enabled inside Photoshop; which we will discuss later.
Image Interpolation is how Photoshop will perform its mathematical calculation when you will either scale the image size up or down. This option is intended for the Image Size command dialog box. Here you command Photoshop which algorithm to use by default. Bicubic Automatic is intelligent enough to determine from the values entered in the Image Size dialog box whether you’re about to scale the image up or down. Then it picks the best method to perform the resizing operation.
Auto-Update Open Documents feature creates and keeps a link between your currently opened file with the original file to take advantage of the Auto-Update feature.
Export Clipboard is where your copied data is temporarily stored. Turn this feature off to improve your application performance. This feature can only be of help if you’re working with other Adobe applications simultaneously; let’s say you’re working with InDesign or Illustrator along with Photoshop where you’re copying and pasting layered files from one application to another.
What it does is it allows your application to export your copied data─it could be even a huge data of a multi-layered file─to your clipboard, means to your temporary or volatile memory RAM in order to export it to the other application where you want to use the data. Since your RAM gets occupied by a huge amount of data it will slow your system down and at worst interrupt your other system processes or cause an application error.
Quick Tips
Drag and Drop is a great alternative to Copy and Paste. It doesn’t block your RAM. It simply bypasses your clipboard and performs the action. So, anywhere you see an option for drag and drop go ahead and take advantage of it. Try to keep your clipboard empty when possible.
Interface Preferences

In recent versions, Photoshop comes with a very dark interface. The reason is to minimize the distractions of its numerous features and options while your attention is more demanded to your work at hand.
By the way, if you find yourself comfortable working with the previous Color Themes, Adobe still makes them available for you. You can change the color theme to what you like. But I recommend sticking with the default Color Theme. I actually like the dark interface.
If anything you like to customize here inside Interface tab I will recommend you to set Standard Screen Mode and Full Screen with Menus Border effect to None. You may want to do this for two reasons.
One, to minimize distractions; since the drop shadows are not the part of your image it can confuse you while making some aesthetic adjustments to your images. Two, Photoshop uses some extra processing power to render the shadows beneath your images. You may want to save it to improve the overall system performance.
Workspace Preferences

If you are familiar with the Photoshop Tabbed Window Interface these options will make sense to you. Though it doesn’t seem to be a great issue for Windows Users the Macintosh Users do not quite like the idea of Tabbed Window Interface.
Here inside Workspace preferences, you can change the default Tabbed Window Interface to Floating Window Interface. To enable the Floating Window, uncheck Open Documents as Tabs. You may also want to uncheck the other option Enable Floating Documents Window Docking along with it.
Disabling Open Documents as Tabs will allow your documents to float around your screen. And disabling Enable Floating Documents Window Docking will prevent the floating windows from being docked with each other.
Tools Preferences

There are four options inside Tools preferences that you may want to pay attention to. Rest of the options are pretty self-explanatory and should be left to their default settings.
Use Shift Key for Tool Switch option is simply asking you to change the way you select a tool from Tools Panel by using a keyboard shortcut. If you keep this option enabled you will have to combine the Shift Key with the tool’s shortcut letter every time you want to grab a tool buried under the tools slot. With this option disabled you will no longer require the Shift key to access a tool from the tool slot. You simply press the shortcut letter twice or thrice depending on the position of the tool in the tools slot.
Zoom with Scroll Wheel is a very handy feature of Photoshop if you’re on a desktop computer or working with a mouse. By default, it is turned off. Enable this feature to use your scroll wheel to Zoom In and Zoom Out; Scroll Up to zoom in and Scroll Down to zoom out. Another advantage of it is it magnifies the area where the mouse pointer is on; it doesn’t just simply zooms the whole image from the center of the screen. Which reduces the amount of time you spend by panning to get to the desired location.
Zoom Resizes Windows takes control of the size of the image window as you change the zoom ratio. This feature only works with the floating window documents. With this feature enabled as you zoom in or zoom out the size of the entire document window will change as the size of the document.
I prefer to keep this feature turned off. Since I find it very distracting when I am working with floating windows inside Photoshop.
HistoryLog Preferences

Photoshop can help you keep a record of step by step details of your edits. This can be helpful if you want to reproduce the work again with a similar approach or want an assistance─or hired retoucher─to perform similar actions with your images.
You must first enable this feature to save History Log. It can be saved in two ways either in the Metadata or in an external text file. If you really want to use this feature saves the log inside metadata. This way you won’t have to deal with extra files with the master copies.
File Handling Preferences

We can improve the performance of the application a lot by tweaking some of the File Handling preferences settings. First, we will look at the File Saving Options. There are two options worth paying attention to.
Save in Background is simply asking you if you like Photoshop to keep the editing resources available for you while it is saving a document. When you hit the save command it takes some time to save the file. For large files, it is even longer.
Without this feature enabled Photoshop will not let you perform any task while the application is busy saving a file. Keep this option turned on if you do not like to wait for Photoshop to save a file. But it may significantly slow down your performance.
Automatically Save Recovery Information Every command saves multiple copies of your file in its temporary locations with its recovery information. It will help you recover your file from a situation of a system crash or sudden reboot or anything where you have to force close the application or shut down the operating system for any reason. Here you set the time interval for saving your recovery information.
It is set to 10 minutes by default. That means if anything you lose at time of disaster it will be the last 10 minutes of your work. The rest of the time you spent working on the file can be recovered. If you happen to have a habit of saving your documents periodically and frequently then you might want to choose a greater time interval. I generally set it to 30 minutes.
Maximize PSD and PSB File Compatibility maximizes the backward compatibility of your PSD and PSB files. I set this to Never. Since I don’t need any backward compatibility with my PSD and PSB files. I generally work with TIFF files which supports a maximum of 4 Gigabytes of data which is larger than PSD─that supports a maximum of 2 Gigabytes of data.
My files have never crossed that size limit. As I work with Photoshop in conjunction with Lightroom I also know that PSB is not compatible with Lightroom. And I also don’t think I will ever work with an old version of Photoshop where I need this backward compatibility to open these files.
Maximizing the compatibility increases the file size. With this feature turned off or set to never you reduce the file size from 20% to 25%.
Export Preferences

These are very basic features of Photoshop Export As dialog box. Here you simply set the default behavior of the Export As command and they are pretty self-explanatory. Set it to what you want when exporting an image specifically for device or web usage.
The export command I am talking about is located under File→Export→Export As… or you can use a shortcut Alt + Shift + Ctrl + W to access it. All the settings you dial here can also be changed in the Export As dialog box.
Performance Preferences

Performance preferences are worth giving your time. The first thing you need to pay attention to is how much of your RAM is dedicated to Photoshop. Photoshop does its calculation and dedicates itself 70% of your RAM by default. Though Photoshop loves RAM it doesn’t dedicate all of it because you have other application and system processes running in the background at the same time.
Increasing the numbers here will certainly boost application performance. But it is never recommended to allow Photoshop more than 85% of RAM. If you still need more RAM the better approach will be to install a RAM with a larger capacity.
Another way to increase the performance will be taking advantage of Graphics Processor or VRAM which stands for Video RAM. It not only increases the performance but it also enables many Photoshop features that are not available otherwise. Graphics Processor or VRAM takes control of the screen redrawing over your RAM. Thus making your RAM available for other tasks to perform.
In the History & Cache settings, we Photographers don’t need to do much. If the settings on the right do not make any sense to you, Photoshop offers you three presets for them on the left. The Default / Photos settings preset is a perfect solution if your photographs are under 50 Megapixels. For larger resolution images you can increase the Cache Level to 5 or 6 and Cache Tile Size to a higher number than 128K. Cache Tile Size determines how much data you allow Photoshop to process at once.
If Anything I change here is the number History States. It is asking how many steps you like to go back in case you’ve made a mistake. Since I have a non-destructive editing workflow. I do not much rely on the history states and I recommend to lower the number of states to improve the overall performance. After all, Photoshop has to use your scratch disk to dump all the data for your convenience. In recent version Adobe Photoshop CC 2018 it is set to 50 by default. I set it to 20 in my preferences settings.
By the way, you can instruct Photoshop to remember up to 1000 states of your edit. And make sure to install more RAM for it.
Scratch Disks Preferences

Scratch Disks are the places Photoshop uses once it has used up all the RAM memory dedicated to it. So, it is recommended that you use a fast disk drive other than the one your operating system is using. Select one or many fast disks those have plenty of available memory in them.
Quick Tips
Watch the Efficiency indicator to monitor the overall performance of the application. It should always be 100%. If the Efficiency is below 100% that’s when it is using your Scratch Disks and if it goes below 90% you should consider adding more RAM to your system.
Cursors Preferences

The Cursors deals with the appearance of the brush. I am absolutely fine with these default settings. The Brush Preview is the preview of your paintbrush while you adjust it on the fly using the Alt + Right Mouse Click method─then dragging up and down to change the Hardness of the brush or left and right to change the size of the brush. You can change only the preview color here.
Transparency & Gamut Preferences

Transparency is how canvas without pixels on it will appear on your screen. Which is like the checkerboard you see on the right side of the dialog box. And the Gamut Warning will display the Color set here when the printer you’re using has out of gamut colors.
Quick Tips
Gamut Warning Color acts as a warning on those areas of your image where it has out of gamut colors for a specific output device. Remember, that it is not the color that will be replaced with the out-of-gamut colors.
Unit & Rulers Preferences

Since I am a photographer I am concerned about the print size and not the pixel dimensions I set the Rulers to Inches. So that I can visualize the size of the canvas when I am laying my images for a specific print media. Graphics, web or mobile designer will set it to pixels. As it is the more common unit for their measurement.
I do change the screen resolution to 94 which is the actual resolution of my monitor for it to calculate the documents size and print size appropriately. It is not the 72 Pixels/Inch which is set by Adobe by default.
Guides, Grid & Slices Preferences

If you work with Guides, Grid & Slices you may need to change the colors and appearances for your convenience. The default colors set here may get merged if your document has the same color. In a situation like that, you may want to set a different color to follow the guides with less difficulty.
Plug-Ins Preferences

I do not make any changes here. But the only option you may want to have a look at is Show all Filter Gallery groups and names. Check this option to see all the Filter Gallery groups and names under the Filter menu on the application menu bar.
Type Preferences

Leave the type preferences as is. In a typical photographic workflow, we do not much rely on type unless we are creating some advertising banners or web graphics using our images.
3D Preferences

Leave these settings to their defaults. These settings have nothing to do with your 2D photographic images.
Technology Previews Preferences

These are the new Photoshop features that are under Technology Previews. You can learn more about them here on Test-drive Photoshop features that are still in the Technology Preview phase.
Resetting Photoshop Preferences
You need to reset the application now and then if you see it misbehaving. And sometimes as Adobe releases new updates and just after you install them things often don’t seem to go right. Going to the preferences dialog box you may also find that the options have been reorganized or more categories are introduced.
Even sometimes after your operating system installs any major update it raises some compatibility issues with the installed version of the Adobe Photoshop. Then Adobe go on inspecting it and releases bug fixes. Or you have messed up all these settings and you just want to get back to the factory installed configuration as you have forgotten all the changes you’ve made.
You don’t need to freak out. Certainly, you can reset them all at once to their default settings.
Warning
If you have followed my article from the beginning you’ve been seeing a Reset button on the upper right side and just below the OK button of every screenshot of the Preferences dialog boxes I have presented. That is normally the Cancel button on the Preferences dialog box but holding the Alt key down turns it into a Reset button.
In my situation, when I took the screenshots I combined the Alt key with the PrtScn key in order to grab a screenshot of the active window─among all the other applications I am working with, in a multi-monitor setup. So you see you can press and hold the Alt key and click on the Reset button. This will reset all the preferences settings inside all the categories and set it to its defaults.
Deleting Photoshop Preferences Settings
The above method may not work if the Photoshop preferences file itself is corrupted. Or for any reason just resetting the preferences doesn’t seem to solve the problems consider deleting the settings file using the following method.
Deleting the file will not do any harm to the application but you will have to spend some time tweaking the application preferences again. If you’ve made changes to your color settings, keyboard shortcuts, and workspaces make sure to save them before taking the following action. Since it will reset them all as well. Saving them separately─as Photoshop allows you to do so─will save you a lot of time.
Now, if you have Photoshop open, close it. Then relaunch the application in any way you usually do it and immediately press and hold all the modifier keys. Meaning launch Photoshop then immediately press and hold Ctrl + Shift + Alt at the same time. If you’ve successfully done what I have just asked, you should see the following dialog box. Or repeat the steps again if you don’t.

Click Yes, to reset Adobe Photoshop Settings or No, to cancel this operation.
Conclusion
As I said earlier this configuration is intended to improve the overall performance of the application for photographic workflow. Some of it will also enhance your user experience and make you more productive. However, it was more important to understand how they control and change the behaviors of the application.
Hope this article helps you understand the ultimate purpose of these preferences settings. Let me know what you think about it. Or if you have any question feel free to put it in the comments below. I’ll be sure to follow-up with you.