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The question was not about use of XML in real life, but about why we cannot store XML files using good old nvarchar/ntext data type.
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Yes, the outcome is an XML file, but you totally operate with varchar values.
You could read, parse, build XML files in SQL Server 2000, having no XML data in place.
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Why SQL has INT, SMALLINT etc, while it has DECIMAL which also can be used to stored integer values?
Why we need VARCHAR, CHAR and NCHAR if NVARCHAR will be capable of storing any character values?
I guess, it's because some more restricted datatype provide benefits of being more tuned for the relevant purpose. In case of XML datatype it provides explicit validation that XML is in well-format form. Also, it allows you to enforce that your XML is compliant to the required schema (Typed XML).