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's popularity derives from other markup languages. HTML is the one people are most familiar with, but increasingly now we see "markdown" languages like that used by wikis and even the stackoverflow post form.
HTML did an interesting job, of formatting text, but it was insufficient. It grew. Folks wanted to add tags for everything.
XML is the extensible markup language (duh, right?), designed so that anyone could create their own tags, and so that your RECORD tag doesn't interfere with my RECORD tag, in case they have different meanings, and with sensitivity to the issues of encoding and tag-matching and escaping that HTML has.
At the start, it was popular with people who already knew HTML, and liked the familiar concept of using markup to organize their data.