The whole thing runs in the tab
Every other free way to open a PSD without Photoshop asks you to upload it first.
For a personal photo that is merely annoying. For client artwork, a logo somebody has sent you, a brand file under an agreement, or anything a customer would be unhappy to find on a server in another country, it is a decision you have quietly made on their behalf.
This reads the bytes in your browser. There is no upload, no queue, no account, and no file size limit beyond what your own machine can hold.
Why this is possible without a server
It sounds like it should need one, and the reason it does not is that the browser already has most of the hard parts.
All sixteen Photoshop blend modes are built into the canvas. Multiply, screen, overlay, soft light, difference, and even the four awkward ones, hue, saturation, colour and luminosity, are values you can just set. No shaders, no maths, no library.
Masks are a compositing operator. A layer mask is destination-in. A clipping mask, the thing you get by alt-clicking between two layers in Photoshop, is source-atop. Both have been in every browser for years.
A magic wand is an algorithm, not a product. A scanline flood fill over the pixel data with a tolerance, which is about sixty lines.
Put those together and the expensive-looking parts of an image editor turn out to be the cheap ones. What actually takes the work is the bookkeeping: what order things composite in, what a mask applies to, and being able to undo it.
What comes through, and what does not
Layers, names, blend modes, opacity, visibility, groups, clipping and layer masks all survive in both directions.
What does not: 16 and 32-bit documents, PSB large format, and CMYK, LAB or Indexed colour.
Text layers arrive as pixels rather than editable type. That is deliberate. Building a type engine that is nearly right produces files that look correct until somebody opens them in Photoshop and finds the line breaks have moved, and a wrong one is worse than an honest gap.
Layer effects and smart filters come through only where Photoshop had already baked them into the layer pixels.
Adjustment layers are the other gap, and it runs both ways. Photoshop keeps the settings for one in its own format, which this does not write or read, so an adjustment made here saves as an ordinary layer and one made in Photoshop opens as an empty one. The pixels either side of it are untouched, and the tool says so at the moment it happens rather than letting you find out when you reopen the file.
And Photoshop has blend modes the browser does not, such as linear dodge and vivid light. Those become Normal, the pixels are untouched, and the tool says which ones it changed instead of hoping you do not notice.
The wand makes a mask, not a hole
Click a flat background with the wand and it floods outwards to your tolerance, then turns what it found into a layer mask that hides it.
That matters because a mask is reversible. The pixels are still in the file; the mask is simply not letting them through. Switch it off and everything comes back. An eraser would have thrown them away, and you would find out two hours later.
Tolerance is the whole game. Too low and you get a ragged edge with a halo of near-matching pixels left behind. Too high and it escapes into the subject. A flat studio background gives way at almost any setting; a gradient or a photographed wall will not, and that is a limit of flood fill rather than of this particular one.
Adjustment layers change what is under them, not the pixels
An adjustment layer sits in the stack and filters everything below it as the image is drawn. Nothing underneath is modified.
So you can turn the contrast down, look at it tomorrow, and turn it back up with nothing lost. Compare that with applying levels straight onto a layer, which rewrites the pixels then and there and is only undoable while the history lasts.
Both are here, and they are labelled differently on purpose, because nothing matters more in an image editor than the difference between "changes how it looks" and "changes the file".
Common questions
Can I really open a PSD without Photoshop?
Yes, with the layers intact rather than as a flattened preview. The file is parsed in your browser and every layer arrives with its name, its blend mode, its opacity and its mask. You can then change any of that and save a real PSD back out, which most free viewers cannot do at all.
Is my file uploaded anywhere?
No, and that is the main reason to use this. Every other free PSD tool asks you to upload the file to their server, which for client work, a logo you have been sent, or anything under NDA is a problem you probably should not create. This reads the bytes in the tab and nothing leaves.
Which blend modes work?
All sixteen: normal, darken, multiply, colour burn, lighten, screen, colour dodge, overlay, soft light, hard light, difference, exclusion, hue, saturation, colour and luminosity. They are native to the browser canvas, which is the reason this is possible at all without a server or a graphics library.
What does it not support?
Be aware of these before you rely on it. No 16 or 32-bit documents, no PSB large format, and no CMYK, LAB or Indexed colour. Text layers come in as pixels rather than editable type, because a wrong type engine is worse than none. Layer effects and smart filters arrive only where Photoshop baked them into the layer. Adjustment layers are a gap in both directions: Photoshop keeps those settings in its own format, so one made here saves as an ordinary layer and one made there opens as an empty one. Blend modes with no browser equivalent, such as linear dodge or vivid light, become Normal. In every one of those cases the tool tells you at the point it happens rather than staying quiet.
What is the magic wand for here?
Knocking a flat background out of a layer. Click the colour you want gone and it floods outwards to the tolerance you set, then turns the selection into a layer mask that hides it. Because it is a mask rather than an erase, the pixels are still there and switching the mask off brings them back.
What is a clipping mask?
It confines a layer to the shape of the one underneath it, which is how you put a texture or a colour inside lettering without touching the lettering. Tick "clip to the layer below" and the layer composites with source-atop instead of over the top, which is exactly what Photoshop is doing when you alt-click between two layers.
Why is there both this and the photo editor?
Different jobs. The photo editor is for cropping, drawing on something, adding text and blurring a face out, on a single image. This is for a stack of layers with blend modes and masks, and for getting a PSD open when you have not got Photoshop. Same site, no account on either.