It stores data as serialised objects, not something you should attempt to read outside of Flash. You could probably write a reader for the format.
The object in question stores the character name, code, dialogue and thumbnail.
The code contains paths which refer to external components such as backgrounds or SWF files, as such SDT implements a path resolution system to find them.
It does this by adding folders to the search path and then using them with the path provided in code when loading it.
If the file cannot be found, you end up with an error and cannot save.
Now something you might actually want to know:
Because Flash uses a all encompassing save format called SharedObject, all requests to save/load data normally boil down to this.
SharedObject is very sensitive to changes, renaming the SWF or moving it to another folder will cause it to stop working. (I might actually look in to fixing that.)