Does Choosing "Edit in" from Lightroom always result in a tif file?

I can’t seem to figure out how to get a DNG rather than TIF?

I am opening Lightroom > right clicking a CR2 photo > Edit in > Topaz Photo AI. At this point it duplicates the photo into a TIF in Lightroom and opens in Topaz Photo AI as that TIF.

Is this working as designed?

Yes, the “Edit In” command is Lightroom’s way of working with external programs without plug-ins, and is completely controlled by LR. There are a few limited options in LR preferences:

If you want to work with the raw file in TPAI then you have to go via the plug-in:

Perfect, thanks!