If you've played around with Word 2003's XML support, you're probably aware that you can load your own schemas into Word and markup the document with your XML. When you save the file out, you get both the WordML and your XML mixed together. This allows you to search the files for your XML while still maintaining the presentation information. You also have the option to save as Data Only, so the result is just you're pure XML.
Often, it's best to store the files with both your XML and the WordML, so that all the presentation information is preserved. You can always tranform the file later to remove the WordML if at some point you want to work just with your data. Here's a simple transform you can run on a WordML file that will give you the equivalent of a data only save:
It's a really simple transform. There are some additional pieces of functionality people have requested from our Data Only save such as line breaks for paragraphs, and pretty printing. I'll look at getting some of that added to the transform at some point and send out another update.