Primary difference between PSD & AI is PSD is an Adobe Photoshop file format that’s raster based & AI is an Adobe Illustrator file format that’s vector based.
This is an Adobe Photoshop Document. It’s raster-based and the file’s size is limited. If you zoom in, you can see the pixel grid used to create it and if it’s resized; it loses data and quality. If all elements are created with “Shape layer” then it’s able to reze, but remember that the effects might be lose.
It is possible to edit a vector file within a PSD document, but this is limited.
AI files are Adobe Illustrator vector files and are scalable and editable without compression or lose of quality. While raster elements can be incorporated into an AI file, the vector format allows more control and versatility.
In Adobe Illustrator, we can open a raster-based graphics file, but only as an embedded image that can’t be edited.