Audacity does not edit files directly but works with "Projects".
The main reason for this is to allow the program to work efficiently and at high quality. For example, imagine if you had a 3 hour recording in Audacity and you wanted to delete a couple of seconds from somewhere in the middle. If Audacity worked directly on one 3 hour audio file, then that would require that the entire file would need to be read from the hard drive and rewritten back to the hard drive. Considering that a 3 hour recording is likely to be around 2 GB or more of data reading and writing the entire file would be really slow. However, because Audacity works with small (1 MB) blocks of data, deleting a couple of seconds from the middle of a 3 hour recording can be accomplished almost instantly.
MP3 files are encoded, which makes it impossible to do much more than very basic trim and split type edits unless the audio is decoded first. If you only want to do basic trimming or splitting of MP3 files, then programs such as MP3Split are far more suitable than Audacity. However if you want to be able to more advanced editing and processing features, then the data that is being edited must be uncompressed.
As you say, there will inevitably be some amount of sound quality loss when decoding/re-encoding audio that is in a lossy compressed file format, and for this reason it is highly recommended that the source material should be in an uncompressed format if possible. Encoding to MP3 should be reserved as the last step in a production. (MP3 is a delivery format rather than a production format).
By default, Audacity is set to work in extremely high quality 32 bit float format. This allows extensive editing and processing to be accomplished with a very high degree of precision. However, when you export your edit file you can select exactly what format you want the finished file to be in.
susanne wrote:I have a WAV file that is 23.4MB in size and 1h 41min long
What is the rest of the format? A 1h 41min stereo WAV file at CD quality (44100 Hz 16 bit) would be approximately 1 GB.