What is a QGD file?
The file with extension .QGD file is actually the associated sqlite database of the QGIS project that accommodates the auxiliary data for the project. The QGD file will remain empty, if there will be no auxiliary data for the project.
Details about QGD File Format
In classic mode, the auxiliary database is saved as a file with .qgd extension along the xml file. The Auxiliary Database system allows to read and write data in the system as an alternative way. When Creating the QGZ which is a zipped container, the .qgd file includes into the .qgz.
What is Auxilary Database?
The Auxiliary Database is actually a standby db system that is created as a response of the duplication of the target database. The auxiliary database is actually a case of a duplicate database would be the database you are duplicating to. E.g. if you setup a standby database using duplicate database, the source database will be the target and the standby database will be known as the auxiliary.