Down to Brass Tacks Let's cut the crap.

Camera Raw Workflow Options

You know that "link" at the bottom of Camera Raw?

It allows you to change a couple of important Camera Raw options. These settings are not image-specific, meaning that they are not saved in the metadata of a file (be it in the XMP or embedded in a DNG) and therefore cannot be synchronized between images. These settings are global and if you never change them, they will never change from image to image.

With that said, let's look at these options in more detail:

First of all, we have to understand that a raw file is not yet processed, it is not yet a matrix of "pixels", therefore it doesn't yet have a color depth or color space — it is only the end result of the processing that is made to fit inside those constraints.

In order for Camera Raw to present to you a preview of the file as it will look like once processed and to present to you an histogram that is representative of that preview, it has to know to which color space and bit depth you will export the file. (If you've been working with Adobe Lightroom, you know that there is no such option window — that is because Lightroom works natively in ProPhoto RGB at 16 bits/channel and only (optionally) converts to more restrictive constraints when images are exported or sent to an external editor.)

In Camera Raw, you will notice right away that if you choose a smaller color space in the workflow options (say, sRGB), the image preview and histogram will automatically reflect that change: highlights and shadows will be clipped far sooner, as a result of values being constrained to a narrower gamut. Therefore, you should set these options before you start processing your raw file, otherwise you will be mistaken in setting your white point, saturation and other significant values.

Speaking of color spaces...

Different people have different opinions on the matter of color space, but I prefer to work just like Lightroom, in ProPhoto RGB at 16 bits/channel, and only squish image data at the very end of the workflow (usually when exporting images for the web). If you've been reading reviews of the latest inkjet printers, you will know that Adobe RGB is not big enough any longer. Here is an excerpt from a review of the Epson Stylus Pro 7900/9900 printers:

This new ink set is called Ultrachrome HDR and for the first time in an Epson Pro series printer Green and Orange inks are utilized. This actually allows these printers to exceed Adobe RGB in certain parts of the spectrum, by a not inconsiderable margin.

What this tells us is that we don't know what new technology will pop up around the next corner, therefore we should keep as much information in our original files as possible — it doesn't hurt since we're keeping the files in 16 bits/channel.

Speaking of bit depth...

Indeed, there is no question that you should work in 16 bits/channel. 8 bits/channel is generally okay for a final image, but not for one that is still subject to manipulation (since, as we know, manipulation implies loss of information). If you start with 8 bits/channel and manipulate, you will end up with less than 8 bits/channel, and this will likely show up as posterization (especially in smooth gradients) — you know you're in this situation when your histogram has gaps.

That being said, Color Space and Bit Depth are really the only two workflow options you should consider while working in Camera Raw, as they are the only ones that will have an immediate effect — all the others will only have meaning once you export the image out of Camera Raw.

The only time you would play with the other settings (Size, Resolution and Sharpening) is if you were going to use Camera Raw itself to export finished products. I personally prefer to let Photoshop handle that, so I actually never touch these settings (except the first time I open up Camera Raw after installing the Adobe Suite, of course), leaving them as they appear in the screenshot above, for optimal quality.

The problem is that if you change these settings, the next time you open up Camera Raw, you will have to reset them back to the original values — something you are likely to forget, which would mess up your files (more on that later). This constant hassle to reset the settings back and forth depending on the usage of the file (immediate export vs. further work in Photoshop) is enough to make me want to batch process my exports through Photoshop and always leave these options alone to the optimal quality.

To complete our exploration of the options...

As I was saying, unless you're going to, say, export JPEGs for the web directly from Camera Raw, you should leave the Size option to the 1:1 value (no upresing nor downresing). Resizing is better left to the specialists — the algorithm applied here is not as optimal, nor as parametrable as the one you can use in Photoshop. Every resizing calls for interpolation, which means loss of detail, so you should only go through one resizing procedure, if needed, at the very end of the workflow, before you export.

Resolution, as it's been said before, doesn't mean anything until you start talking about printing. Whatever value you put here is meaningless as long as the file is not actualized. Stick to 72 if the file is going on the web (merely because that is the established standard), but otherwise, this number has no effect on the image whatsoever.

Output Sharpening, too, should definitely only be used if you're going to export files directly from Camera Raw. This, too, is a step that should be done at the very end, and is specific to where the file will be going. You don't apply the same sharpening on files viewed on screen vs. files printed on glossy paper vs. files printed on matte paper vs. etc., so you shouldn't apply it at this point if the file will be going to Photoshop for further processing.

To wrap up

Frankly, unless you're going to use Camera Raw to export images directly, to get optimal results, save time and avoid mistakes, I strongly recommend you use the settings shown in the screenshot above and never bother touching them again.

But it gets better...

Wouldn't it be nice if you could just change your mind later, once you're in Photoshop and it's too late because you've left Camera Raw? Wouldn't it be great if every setting in Camera Raw could still be changed later, once you're in Photoshop (and I really mean every setting, not just the workflow options)?

Well, they can, and it's amazingly simple to do! Instead of using the "Open Image" button (which rasterizes the raw file for good), simply hold the "shift" key to turn the button in an "Open Object" button. Ta-dah! You're now working with a "Smart Object": the raw file is now embedded inside your Photoshop layer and can always be edited back in Camera Raw when needed.

To bring the raw file back in Camera Raw, simply double-click on its thumbnail, and voila!

Note that this embedded raw file is not linked in any way to the original raw file that was opened as a Smart Object — you could always move the initial raw file or delete it altogether and it would not affect your image in Photoshop. Note as well that any Camera Raw parameters you change when editing your Smart Object will not be applied to the original raw file neither. It really is a copy of the raw file that was embedded inside the Smart Object, not just a link that was established.