Websites are coded in HTML; HTML is Hypertext Markup Language. Web browsers and mobile devices made to access internet can render HTML pages. So, whatever you want to display through internet has to be embedded in HTML.
When you develop a website from scratch the basic layout is created by an artist in Photoshop; the designer creates the initial layout in PSD format which should be converted to HTML. PSD to HTML conversion is a must; otherwise the website cannot be loaded in a browser.
HTML websites are search engine friendly; many webmasters prefer their websites to be built in HTML or XHTML (eXtensible Hypertext Markup Language). Once you receive the basic layout of the website, you have to check it and let the web designer know what kind of changes you are looking for, if any. An experienced and skilled coder or web designer can slice the PSD file and convert in to HTML or XHTML.
PSD files can be edited using Adobe Photoshop; while converting it to HTML or XHTML the designer needs to slice the PSD file first. To do this, the PSD has to be divided in various layers in Photoshop. Once done, each layer should be coded in HTML.
Some applications are available that help you to convert automatically. But it is always recommended to get it done by an expert designer because any mistake in HTML coding may damage the functionality of the website.
Moreover, any mistake in HTML or XHTML may damage the ranking of the website. Search engines prefer w3c validated and SEO friendly websites; if the PSD to XHTML/HTML conversion is not done properly, it will show errors in validation and search engine crawlers may find it difficult to access the website.
To Convert PSD to HTML it is always good to get this conversion done by an expert coder to avoid further troubles.