XMLConnect is, essentially, an XML service. One way to think of a "normal" Magento website is
- Backend code adds things to carts, fetches products from database, etc.
- Execution is handed off to the layout system
- Layout system makes HTML/Javascript/CSS
Magento has a product called Magento Mobile, which lets you create an iPhone or Android application to sell products from your Magento system. Magento Mobile works something like this
- Backend code add things to carts, fetches products from databases, etc.
- Execution is handed off to an XML rendering system
- XML is sent back to the phone
- The binary application sitting on the phone processes the XML and makes the pixels on the phone look and act like a store
XMLConnect is the module that lets Magento do this. It creates XML requests/responses.
Additional Reading: Develop your own Magento mobile application