I was curious about this issue, having never paid much attention to the Photoshop scratch file (other than to move it off the system drive.)
I poked around for a while and was amazed I what I saw. Hardly extensive tests, but I used the Windows Process Monitor (Procmon) to watch activity on the Photoshop scratch file while doing some basic editing.
I'm no expert on Procmon. In fact, I'm quite confused on what it calls an "operation". There are about 50 operations with cryptic names (like IRP_MJ_QUERY_SECURITY). But some of them have the words "IO", "Read", or "Write" in them, so it seems safe to assume they show I/O.
I saw a ton of "writes", but never saw a "read" operation. And the "writes" happened when you might expect, but also when you would not expect. For example, I added adjustment layers and saw no activity against the scratch file. But then I just hit Ctrl-t to start a transform and a bunch of "write" operations showed up.
So it seemed to me that Photoshop is using its scratch file for a lot of miscellaneous things, not just for swapping out memory. In fact, the name "Scratch" instead of "Swap" is a hint at that. I always thought of it as a "swap" file. It probably is that, but a lot more.
Mostly I banged away on small files, well below my available ram. But I also created one huge file to exceed my ram allocation. The scratch file got a lot bigger, of course, but the amount of activity reported by Procmon didn't seem to change much. Most strange, I thought, was that I never saw a "read" operation, even on the huge file.
Bottom line, there is a lot of scratch file activity, so keeping it on your fastest drive is certainly a good idea.
Google turns up very little about the Photoshop scratch file. If anybody finds a comprehensive source I'm sure we would all like to know.