if you open with "preserve" option does Photoshop edit that document locally in the preserved color space that was embedded in the document while temporarily ignoring the global working space?
It does exactly as the name implies. It preserves the color space of that document. If you started with sRGB, you open that in sRGB. If you started in Adobe RGB (1998), the document preserves that color space, you get Adobe RGB (1998). This is directly opposite of the
Convert policy. You have the preferred RGB working space set for ProPhoto RGB. You open anything in RGB
but ProPhoto RGB, Photoshop converts that data
to ProPhoto RGB (whatever you set as your preferred RGB working space). Again, dangerous for
nearly everyone.