What is "preparing images" doing?

Whenever I first preview my layout, or when I change images in certain sprites, "preparing images" shows up and takes a good amount of time (~2 minutes). I have a lot of high-res images that I'm trying to optimize, so I'm sure that will help, but can someone help me understand what "preparing images" is actually doing? Knowing that may help with my optimization.

It's assembling all the images in your project in to spritesheets. You can view them by right-clicking the project name in the Project Bar and selecting Tools -> View spritesheets. It only needs to do this once the first time you preview the project, and then it re-uses the results so subsequent previews are faster, and editing the project will only need to reassemble the few changed spritesheets.