I just had a long discussion about this topic with an Adobe rep...
I told him I would be importing CR2 RAW files and converting them to DNG files, and activating the option to "Automatically write changes to XMP". I told him I would have dual storage drives installed; a 160GB SSD (for Windows/programs and catalog file) and a 750GB HDD (for all other storage including DNG image files). My question was; is this the proper setup to take advantage of the speed of a SSD and optimize Lightroom performance?
The answer was No. I was told that if using DNG files, I would need to do one of the following for best performance: Save the DNG image files to the SSD -or- "Uncheck Automatically write changes to XMP" and keep the DNG files on the HDD.
He went on further to explain that the Auto Write option would result in writing to the DNG files every time a slider was moved, and NOT simply when LR wasn't busy or when exiting LR (I specifically asked about those 2 questions). Therefore, the HDD would be constantly accessed to write data IN ADDITION to accessing the SSD to write to the catalog.
Saving all DNG files and catalog file to the SSD would maximize performance, but at the obvious cost of limited storage space. Rep also stated, "constant and repeated reading/writing to SSD may cause premature failure".
Therefore,
The solution he provided was to disable "Auto write changes to XMP", save DNGs to the HDD, catalog and previews to the SSD, and manually "Save Metadata to File" whenever I want to save my progress or final edit into the RAW file. After doing so, the DNG file would be able to be transferred to any other program or computer, and still retain an edited version rather than starting from scratch.
So, I wasn't sure about the "Write changes to XMP" option specifically when working with DNG files, but his explanation makes perfect sense. If using a SSD and HDD, with DNG file formats and no .XMP sidecar files, we need to simply disable the option.

