Denis is one of my fellow SDETs on the SQL Server Engine team. He just started a blog about XSD in SQL Server.
Static Typing is one of those things that causes a bit of confusion at first for people, but eventually they come around and "see the light". The basic idea is that we use XML Schema information to validate that your XQuery is sensical before executing it. This prevents all sorts of nasty run time errors (although not all of them) and can also help to catch misspellings and other typos that could lead to incorrect results.
I think Denis is going to be doing a whole series on various XSD and XQuery static typing "gotchas" so it is definately worth keeping an eye on.