It depends on whether or not you have edited it already in SharePoint Designer, if you have, it is stored in the database and you cannot open it with a text editor. Otherwise, it is stored on the file system of each WFE server, this is what is called a "ghosted" file, meaning that the original file is not stored for each list instance, but rather the main master copy is used for all of them. Although you can edit it directly, this is highly unadvised, as the change will apply to all lists of the type, existing and future, you will need to make the change on all servers and any future service pack can potentially undo your changes.