I see a lot of people get confused by this question.

The simple answer is, if the material you are engraving on is light such as basswood, white paper, or white acrylic, you do not invert. If the material you are engraving on is dark such as slate, black acrylic, dark colored tumblers, you invert.

Another reason to invert is when you want everything but the image to be engrave.  An example of this would be if you were making a stamp.   There are 2 ways to achieve this type of invert and I will cover both.

Inverting image files like png and jpeg is easy and simply involves knowing how to use XCS.

Select your image and click on adjustments.  There you will see an invert button that when selected will invert your image.

When inverting SVGs or vector files, the invert button is not available.  You have to manually invert the image.  There are 2 ways to do this and I will show you both.

The first way is using a basic shape around the image, such as a rectangle or circle.  And example of when this would be used is when making a stamp. 

In my cow example above, you place the vector on your canvas and then place a shape around it, in this case a rectangle.  You then select both objects and click on combine, subtract at overlap.  Now when you click on engrave, the rectangle will be engraved except for the cow.  You can now mount the stamp onto a rectangle wooden base.  If you wanted to place the stamp on a round base, you would use a circle and follow the same steps for the rectangle.

The second way is more appropriate for when you are engraving on dark surfaces and you don't want a background.  An example would be a slate coaster.  You want the coaster to stay black and simply engrave the image.  

To invert just the image, you will select your image and click on outline. Choose the size of your outline.  I find the default works best, but it really depends on the image.  I try to have the outline size similar to other lines in the image.

Once you have your outline, select the two objects and click on combine, subtract at overlap.  Now select engrave and your image has been inverted and is ready to be engraved on dark material. Trust the process.  The pictures looks weird, but will look correct once you are done engraving.

Hope this tutorial helps clear inverting up for you.  Let me know if you have any questions.