XInclude is a standard for building up XML documents from smaller pieces, being a replacement for the external entities. The external entities can be a problem because they cannot have a DOCTYPE declaration, and therefore are not valid documents on their own.
The main usage is in the documentation frameworks where the documents may be composed of many files, XInclude allowing the validation of the master file and also the validation of the individual sections.
The advantages of modular documentation are: reusable content units, smaller file units that are edited, better version control, distributed authoring.
Here is an example of a chapter file and a book file that includes the chapter using XInclude.
Chapter file chapter1.xml:

Main book file:

The XInclude support in <oXygen/> is turned on by default. You can turn it off by using the Options/Preferences/XML/XML Parser Options, the entry Enable XInclude processing.
