The Metadata defines particular schemas for basic properties. These can be as useful for those of us who don’t have the pleasure of a good workflow product, as it records the history of an image as it passes through multiple processing steps, from being photographed (EXIF data), scanned, photo editing steps (such as cropping or color adjustment), to the final assembly into an end image.
XMP basically allows each software program or device along the way to add its own information to a digital resource, which can then be retained in the final digital file.
The details within the XMP can be customised, from custom panel extensions which can be added, such as a Creative Commons License (which I find highly useful prior to posting images onto flickr or Picasa).
While I haven’t explored the full possibilities of XMP – I have noticed that some clever people are utilising it to assist with Raw version control.
I look forward to posting more on this in the future.