https://forums.dolphin-emu.org/Thread-how-to-install-texture-packs-custom-textures-info
You NEVER want to use both a PNG and DDS pack together, always pick one or the other. The short version is, if a texture pack author provides both a DDS and PNG version of their texture/resource pack, you most likely want to use the DDS version. The reason is that DDS is much faster to load than PNG and is less likely to "stutter" when textures are loaded in. There is a caveat to DDS textures, and that is reduced image quality. But, a properly created DDS texture pack will be nearly indistinguishable from its PNG counterpart.
There are several types of DDS formats, ranging from BC1-BC7, and can also be known as DXT1-DXT5. The format that users should be concerned about in regards to Dolphin texture packs is the BC7 format. If a texture pack is using BC7 DDS textures, the user must have a DX11 capable GPU or the textures will not load. In this case, the