7

LyX files can have embedded images which seems to suggest that they aren't the same as a .tex files.

What exactly is a .lyx file and how does it work?

10

.lyx files cannot have embedded images. They can references images but the images are external files.

The format of a .lyx file is very far from the format of a .tex file. A .lyx file is a text file (or possibly a compressed text file if compression is used) written in its own format (LyX's internal format, the revision of which is stated at the top of each .lyx file), which is similar to XML but not exactly XML. Only LyX (and associated tools, such as lyx2lyx) know how to interpret .lyx files.

As for the relationship between .lyx files and .tex files, it should be thought of as the following: LyX is a program that knows how to read .lyx files and is able to export .tex files.

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