XML is the extensible markup language. XML uses tags very similar to HTML, instead of describing the structure of the page the tags, XML uses the tags to describe the data. This allows a structured data format, that can be extended without breaking previous implementations. A good starting point for learning XML is:
http://www.w3schools.com/xml/xml_whatis.asp
XML is becoming a standard way for people to export and import data from different systems. Its simplified mark up language make it easy for different systems to read data in, without knowing the exact structure of the data. If the XML data description has been properly created it is possible to add additional information to your XML data files without affecting system that are already using the information.
If you load XML data into flash, an object model will be created that will allow you to easily manipulate and extract the data. The same object model is available to create XML data, and export it to an extenal system.
For retrieving information external to the flash file loadvariables might work when loading simple or small amounts of information. Once you have to retreive information where the amount of information changes, or is being created by an external source, you should use XML
