The XML declaration does a lot more than specify the version of XML. To start with, it identifies the document as being XML; this is in the fine tradition of the Unix "magic number" and #! constructs (pipe down purists: I know that #! is really a magic number).
This idea, that documents should be self-identifying has also been taken up in recent times by VRML.
Note that the XML declaration also provides a home for the encoding declaration and standalone declarations, discussed a little later.
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