You misunderstand its function. Unlike ACAD... you cannot insert a SKP 'reference' into another SKP file and thereby reduce that container's size. You must always add/load an instance of the external SKP [full size]. If you need to use Xrefs you should work on the individual files and not the main-container. The idea is that several users can work on individual external component SKPs and them refresh the main container SKP, reloading them as needed. As you say if you edit the component in the main-container it might be newer than the external version, changing the external version will then prompt a possible update which would overwrite data... You do not need to use Xref manager unless you have several external SKP components that are combined into one file. There is no file size advantage in doing so.