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If you're doing any design work or any compositing where you have multiple layers and you're making those layers or images larger and smaller, you'll soon find out that the Free Transform command is a destructive command. So here we can see in this file, I actually have two copies of this totem, one sitting to the right, and I can turn on the visibility of that layer by clicking on the eye icon in the Layers panel. Now the totem layer, the one on the left, is the one that's selected, and that's the one that I'll apply the Free Transform to.
I'll go ahead and hold down the Option and the Shift key, and we'll make this a lot smaller. Then I'll tap the Enter or the Return key in order to apply that transformation. When I applied that transformation, I told Photoshop to throw away a lot of pixels, so that if I get to this point and I've changed my mind and I want that layer to be larger, if I use Free Transform again--this time I'll use the keyboard shortcut, Command+T or Ctrl T-- and I size this image up by transforming it and scaling it while holding down the Option and the Shift key, you can see that when I apply this transformation, I've lost a lot of detail in the image.
So, how can we avoid that? Well, we can avoid it by turning our layer into what's called a Smart Object. So let's go ahead and move to the totem copy layer. I'll choose Layer > Smart Objects and then convert this to a Smart Object. Then I'll use Free Transform on this layer and scale it down just as small as the other one was. I'll apply Enter or Return to apply that transformation, but because it's a Smart Object--and by the way, I know it's a Smart Object because of the icon I can see here for the Smart Object in my Layers panel-- when I use Free Transform again and I drag up my image to resize it back up and tap the Enter or the Return key to apply that transformation, you can see that I haven't lost any detail.
So although Smart Objects might make your image a little bit larger, because when you transform your image smaller, Photoshop is still keeping hold of all of that higher-res information, I think that the trade-off for having the flexibility to change your mind at any time and change your layout or change the size of your image is well worth the trade-off of just a little bit of an increase in size.
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