File Format
SQL CE databases reside in a single .sdf file, which can be up to 4 GB in size. The .sdf file can be encrypted with 128-bit encryption for data security. SQL CE runtime mediates concurrent multi-user access to the .sdf file. The .sdf file can simply be copied to the destination system for deployment, or be deployed through ClickOnce. SQL CE runtime has support for DataDirectories. Applications using an SQL CE database need not specify the entire path to an .sdf file in the ADO.NET connection string, rather it can be specified as |DataDirectory|\
SQL Server Management Studio 2005 can read and modify CE 3.0 and 3.1 database files (with the latest service pack), but SQL Server Management Studio 2008 (or later) is required to read version 3.5 files. Microsoft Visual Studio Express 2008 SP1 can create, modify and query CE 3.5 SP1 database files. SQL Server Management Studio cannot read CE 4.0 files. Visual Studio 2010 SP1 can handle CE 4.0 database files.
The .sdf (Sqlce Database File) naming convention is optional and any extension can be used.
Setting a password for the database file is optional. The database can be compressed and repaired with the option of the compacted/repaired database to be placed into a new database file.
Read more about this topic: SQL Server Compact
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