PSD's are the raw design files for the skin, with each element of the graphic changeable/editable in Photoshop. It makes skin changes/customizations easier to accomplish. For instance, if you have a PSD for the Edit button for your skin and you want make a Thanks button, it makes changing the text on the button as easy as working in Wordpad. Select the text layer of the button, backspace over Edit and write Thanks in it's place and save it back out as a jpg or gif.