A VTS file is a transaction store. It is like a data store for the VSE recorder to read and write the transactions of a virtual service - like a raw traffic file.
When we record any transactions it is written out to the VTS file, and when we need to view the transactions then the info from VTS is read.
DevTest Portal recordings store the recorded transactions in the VTS file.
The VTS file is not needed during VSM deploy and playback.