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.xml is shorthand for eXtensible Markup Language, and is a widely popular format for storing data in video games. XML is essentially meta-data: that is, data about data. The programmer can extend the capabilities of XML and create their own tags, hence the term "extensible". It is a markup language in that it is made up of tags, which look something like this:
<?xml version="1.0" encoding="UTF-8"?> <note> <to>John</to> <from>Jane</from> <heading>Reminder</heading> <body>Don't forget me this weekend!</body> </note>