How do you directly edit a smart object in most recent Photoshop?

Question

A workflow I've long used in Photoshop is:

• Open new canvas.
• Place as Embedded (formerly just Place) a .jpg for composite.
  • Photoshop automatically places this as a smart object.
• Double-click smart object to open in it's own window/tab (Photoshop opens this as a .psb) to make destructive or multi-layer edits.
• Save and close .psb to return to canvas and see updates.

When I try to follow this workflow in the latest versions of Photoshop, it opens up the smart object as a .jpg and when I attempt to save and close, it wants to do a Save As to the file system, as if it's an externally linked file.

Is there a way to make it behave the way it used to? If not, how to do I make multi-layer edits to the embedded Smart Object?

Answer 1

So I've discovered the source of the confusion—a placed object and a smart object are actually subtly different layer types in newer versions of PS despite looking exactly the same. So you can actually just right-click on the placed object in the layers palette and choose "Convert to Smart Object" just as you would a pasted layer. This re-enables the previous workflow.

Answer 2

When I place an image in the canvas, photoshop create a smart object. Then I convert the layer in further smart object. Inside the object you will find the image in smart object. I advice to keep smart object otherwise you transform it an flat image. And save.