I thought this was pretty well-known. Adobe has been running their own VM engine for a long time now. I'm not sure which Photoshop first shipped with it, but given how pretty much everyone in prepress used it it's likely since at least Photoshop 3.
The PS.temp file is a special file created by the Adobe Photoshop program to implement the program's virtual memory scheme. Virtual memory allows you to work on images of nearly any size, by using a hard disk instead of RAM (random-access memory) to hold information. The PS.temp file contains the program's virtual memory information. The file is normally deleted when you quit the program.
For implementation details, see the files UVMemory.p and UVMemory.inc1.p in the source distribution[2].
