I think most of the time it’s lossy open as whatever app’s specific feature set is. It’s rarely plain text, unless it’s a file format the app doesn’t recognise. Obsidian will ignore anything that’s not .md, iA Writer will open as plain text. But if you feed them .md files, they will render whatever they know and ignore the rest.
I think the closest analogy would be graphic editing apps that can edit AI/PSD files. Affinity and Pixelmator can open PSD/AI files regardless of origin and either a) on open, convert to proprietary format with various degrees of loss or b) edit PSD file directly, also with various degrees of loss. They either use own extension or do (possibly lossy) save back to PSD or AI. But unless you’re actively editing concrete file, the language around that is usually Export to... and Import , not Save and Open .