.pse is a format which is created by Adobe Photoshop Elements. This format is used for some interesting creations which can be created using this software only. Most famous creation in .PSE file is Photo-Book. Adobe Photoshop Elements provide some ways to create Photo-book with multiple photographs, backgrounds, frames etc and finally can be uploaded to Kodak website for fine printing of the Photobook. I have personally ordered one Kodak book and liked the quality with respect to the money they charge for it.
.PSE format is simply a set of different PSD files organized in some specific way. Now I am PSD is familiar to you. Just to add some introdcution, PSD is PHOTOSHOP DOCUMENT file which supports layers.
PSE - Photoshop Elements file
PSD - Photoshop Document
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