Regarding exclusions, what about hidden files and folders?

If the following:

!*.psd
!*.ai
**

…is designed to include all Photoshop files and all Illustrator files and then ignore all other files, why would syncthing be attempting to sync hidden files and folders?

Do I need more to this? My goal is to only include all Photoshop and Illustrator files in the users profile folder structure and nothing else.

No, that should be sufficient.

It’s possible that the files got picked up before they were ignored, hence it tries to sync them, yet it should go away after they are ignored on the receiving side.