microsoft.powershell.psreadline.dll

Dynamic-link library Reference

A .dll file is a dynamic-link library on Windows. The file has the Portable Executable format and contains code, data, and resources. Programs load the library at run time and call its exported functions. Many programs can share one library, which decreases memory and disk usage. Most functions of the Windows system live in .dll files.

A file extension is only a part of the file name. It does not give a guarantee about the format or the content of a file. But on Windows, the extension selects the program that opens the file.