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When Synapse creates a preview file for either an ExternalFileHandle or an S3FileHandle, the resulting preview file will be stored in S3 and be assigned a PreviwFileHandle. Currently, Synapse will generate previews based on the original file's contentType. See Internet Media Type.
HTTP Multipart (not REST)
Since the file web services deal with uploading files they are implemented as HTTP Multipart. This is a divergence from most of the Synapse web services calls which are simple REST calls. Most HTTP clients including browsers can natively handle multipart content types.