Ask yourself what XHTML actually represents; it's well-formed XML, yes for most people using plain XML 1.0 isn't required.
Nonetheless, XML can be used in many ways and is generally employed server-side, for example the last Olympic Games used XML for its databases so that a multitude of platforms and programs and different media in many countries could interpret the data.
The Mozilla browser uses XML in its user-interface via XUL (XML-based User-interface Language) the options are vast but for the typical Webmaster who wants to display HyperText within a common browser then XHTML is normally suitable.
eXtensible Style sheet Language Transformations (XSLT) for example could be used to convert XML text into sound, or a PDF file. Actually like most people you are best off using XHTML and don't require that extra power.
When you consider XML 1.0, it's easy to think of server-side driven sites...