As an option, Drools also supports a "native" rule language as an alternative to DRL. This allows you to capture and manage your rules as XML data. Just like the non-XML DRL format, the XML format is parsed into the internal "AST" representation - as fast as possible (using a SAX parser). There is no external transformation step required. All the features are available with XML that are available to DRL.
There are several scenarios that XML is desirable. However, we recommend that it is not a default choice, as XML is not readily human readable (unless you like headaches) and can create visually bloated rules.
If you do want to edit XML by hand, use a good schema aware editor that provides nice hierarchical views of the XML, ideally visually (commercial tools like XMLSpy, Oxygen etc are good, but cost money, but then so do headache tablets).
Other scenarios where you may want to use the XML format are if you have a tool that generates rules from some input (programmatically generated rules), or perhaps interchange from another rule language, or from another tool that emits XML (using XSLT you can easily transform between XML formats). Note you can always generate normal DRL as well.
Alternatively you may be embedding drools in a product that already uses XML for configuration, so you would like the rules to be in an XML format. You may be creating your own rule language on XML - note that you can always use the AST objects directly to create your own rule language as well (the options are many, due to the open architecture).