The XS language is a glue between normal Perl and C. When people want to squeeze every last bit of performance out of an operation, they try to write it as close to the C code as possible. Python and Ruby have similar mechanisms for the same reason.
Some Perl modules have an XS implementation to improve performance. However, you need a C compiler to install it. Not everyone is in a position to install compiled modules, so the modules also come in a "PurePerl" or "PP" version that does the same thing just a bit slower. If you don't have the XS implementation, a module such as Data::Dumper can automatically use the pure Perl implementation. In this case, Data::Dumper also lets you choose which one you want to use.