An entity is simply a way to name a placeholder that the XML parser will replace with the correct value when it interprets the XML document. Probably most familiar are the predefined character entities that are used as placeholders for special characters that are illegal in XML or are frequently mishandled by platform-specific text handlers. For example &lt; and &gt; represent the "less than sign" character (<) and the "greater than sign" character (>).

More importantly, XML entities provide you with the ability to create placeholders for reoccurring text, or placeholders for values that will be resolved at parse time. Pointers to external resources such as DTDs or XML Schema documents often make use of entities.

If you are unfamiliar with the different entity types in XML, this is an area worth studying before beginning your XML development.