Yes XML is human readable but so is comma delimited text and properties files.
XML is bloated, hard to parse, hard to modify in code, plus a ton of other problems that I
XML provides a very straightforward way to represent data. Parsing is fairly easy - it's a very regular grammar and lends itself to straight forward recursive descent parsing. This makes it easy for data consumers and producers to exchange information without really having to know too much about their respective applications and internals.
It is, however, an extremely inefficient way to represent data and lends itself to being abused horribly. An example of this is an object interface I worked with that, instead of exporting constructors and properties for particular objects, required me to author XML programmatically and pass in the resulting XML to the single constructor. Similarly, XML does not lend itself well to large data sets that may require random access without creating an added cataloging system (ie, if I have a thousand page document in XML, I will need to parse nearly the entire file to get to page 999, assuming the page data is ordered), whereas I'd be better off putting the actual page data in a separate file or files and use the XML to point to the correct file or position within a file.