Hi TazMan
I was confused over this too, PNG are fine to use but DirectX utilizes DDS more efficiently just remember DDS is a lossy format the more you edit it and save it the more quality you lose, I export as PNG and when I am happy with the texture I export to DDS DXT1 for non transparency and DXT5 for transparent models. I am also sticking to 2048x2048 although some assets look perfectly fine at 1024x1024
PNG stores images in a compressed, lossless format that is optimized for storage on disk. DDS stores textures in formats that are native to the GPU, and hence optimized for GPU consumption. For PNG's to be useable as texture data, they typically need processing to convert to a GPU format, and possibly also create mipmaps. This can take some time if you have a lot of textures to load, particularly if you want to load them as a DXT/BC-compressed format so that they're optimized for GPU memory and bandwidth consumption. They will also need some manual processing if you want to load them as 1D, 3D, or Cube textures. DDS can store all of those formats natively, which means you can load them very quickly with little-to-no processing.
I did the preview orbs as PNG so that people could play with the textures and the quality of the previews orbs were high, I don't think anyone would use them in a game so thought it did not matter.
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