A preset is the entire settings tree - frame, adjust, dither, palette mode and colour count, the slot policy, the transparency slot, and the export settings including formats, the batch naming pattern and the overwrite policy - saved as one human-readable TOML file. It is meant to be hand-editable and diffable, and to be kept wherever suits your project, not only in one managed folder.
NextDither opens on a built-in preset named NextDAAD Layer 2, applied before you do anything else. It is compiled into the application rather than read from a file - the toolbar reads Preset: NextDAAD Layer 2. It exists so a freshly opened image already converts to settings that produce correct NextDAAD output without any setup: 320x256, letterboxed and anchored top centre, Floyd-Steinberg dithering, and palette slot 255 keyed to pure magenta so a painted hole becomes a real hole in the file. Without it applied by default, a fresh conversion would have no guarantee of being NextDAAD-correct at all - the built-in preset is what makes the tool useful with no configuration.
The toolbar's preset line names whichever preset is loaded, and adds (modified) the moment any control diverges from that preset's saved values: Preset: NextDAAD Layer 2 (modified). This is the only visible sign that what is on the rail and what is on disk have parted ways, so Save has something to report.
The Preset menu lists, top to bottom: a Load a preset heading, the built-in preset, then any presets in NextDither's own managed presets directory (or, with none saved yet, a line reading "No saved presets yet - use Save As below to add one."), then Load..., Save and Save As.... Hovering the menu names the exact managed directory it is using - a presets folder kept beside the executable when that location is writable, or the platform's configuration directory otherwise. Clicking a name in the list loads it directly; Load... and Save As... each open a native file dialog instead, which is what their trailing dots mean.
Save overwrites whichever preset is currently loaded with the current settings. The built-in preset can never be overwritten this way - it is the fallback every other preset departs from - and choosing Save while it is loaded writes nothing and says so:
Not saved: the built-in "NextDAAD Layer 2" preset cannot be replaced - it is the fallback these settings started from. Use Save As to store them under your own name.
Save As... opens a save dialog, defaulting to the managed presets directory, and writes a new .toml file under the name you choose.
Both Load... and Save As... open a real file dialog, and neither confines you to the managed directory - it is only where the dialog starts. Saving into some other folder, such as the one holding a game's source art, works exactly the same way: the toolbar then names the preset together with its full path, so it reads differently from a managed preset of the same name, and it does not appear in the Preset menu's list, which only ever shows the managed directory. Save on a preset loaded this way writes back to that same external file, not into the managed directory. Load... can likewise open a preset from anywhere, including a managed one - reaching a managed preset by dialog and by clicking its name in the list are the same action.
If the preset last in use cannot be reopened - moved, deleted, or its file broken - NextDither still opens normally, on the built-in preset, with a red line naming the file that could not be reopened. It never fails to start over a missing or broken preset.
The Image tab's three groups - Frame, Adjust and Dither - each carry their own Reset Frame, Reset Adjust and Reset Dither button beside their heading. Each puts that one group back to the values held by the loaded preset, not to zero and not to the built-in preset's own values, and re-converts. A button is greyed out whenever its group already matches the loaded preset, so the three buttons double as a per-group "this has moved from the preset" indicator - hovering a greyed-out one says so.
If a preset's transparency slot is marked Pinned rather than Keyed, it still parses and still converts - it just quantises pixels painted #FF00FF as an ordinary colour instead of turning them into holes, and nothing about loading it looks wrong at a glance.
The palette dock is where this becomes visible. Loading a preset like this shows an amber line above the grid:
The transparency slot is not keyed. Pixels painted #FF00FF will be quantised as ordinary colour, not turned into holes.
beside a button reading Set it to keyed #FF00FF. Pressing it changes the setting in memory only and marks the preset (modified) - nothing is written to the preset file until you choose Preset > Save. The warning stays visible even if you collapse the dock, since collapsing it for space must not hide a warning about artwork losing its holes on export. See Transparency for the full rule this warning protects, and for what is and is not caught outside a batch run.
See The preset file for the format itself, and Batch conversion for how the loaded preset governs a run.