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SPB files are compiled using simpropcompiler.exe shipped
with the FSX deluxe SDK. However no tools were provided to
do the inverse task.
This program can decompile SPB and produces the original
XML document.

PB means SimPropBinary. It is a proprietary file format
introduced in Microsoft Flight Simulator X. It is a generic
data format that store various kind of informations and can be
compiled from different XML files.
Files in SPB are read quicker by the simulator than
XML files, so when performance is an issue files can be
compiled to SPB.

PropDefs or property definitions are XML documents that
tells how a particular kind of XML file can be compiled
to SPB.

2. What is SPB used for in FSX ?

SPB is used in place of XML in some parts of the simulator:
- Missions
- Autogen description
- Dialogs localisation
- Living World configuration
- Gauges (unused)
If you look at propdefs files (in the propdefs subdirectory
of FSX), you will see all currently supported types.