The document entity is an important concept, particularly in networked applications. On the network, it's typically expensive to send documents around in multiple pieces; in most cases, you'd prefer to send just one chunk down the wire. That chunk is the document entity, and it's all that a non-validating XML processor is required to read. Even if you author your documents in a distributed modular fashion in multiple independent pieces, you probably need to compose them so that for delivery, each document entity is a more or less complete package.
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