As quoted from Wikipedia, an XML database is a data persistence software system that allows data to be stored in XML format. This data can then be queried, exported and serialized into any format the developer wishes.
Two major classes of XML database exist:
XML-enabled: these map all XML to a traditional database (such as a relational database), accepting XML as input and rendering XML as output. This term implies that the database does the conversion itself (as opposed to relying on middleware).
Native XML (NXD): the internal model of such databases depends on XML and uses XML documents as the fundamental unit of storage, which are, however, not necessarily stored in the form of text files. Read more..