XAML is essentially a subset of XML. One of the main benefits of basing XAML on XML is said to be that it can be parsed with existing tools. And it can, to a large degree, although the (syntactically non-trivial) attribute values will stay in text form and require further parsing.
There are two major alternatives to describing a GUI in an XML-derived language. One is to do what WinForms did, and describe it in real code. There are numerous problems with this, though it’s not completely advantage-free (a question to compare XAML to this approach). The other major alternative is to design a completely new syntax specifically tailored for the task at hand. This is generally known as a domain-specific language.
So, in hindsight, and as a lesson for the future generations, was it a good idea to base XAML on XML, or would it have been better as a custom-designed domain-specific language? If we were designing an even better UI framework, should we pick XML or a custom DSL?
Since it’s much easier to think positively about the status quo, especially one that is quite liked by the community, I’ll give some example reasons for why building on top of XML might be considered a mistake.
Basing a language off XML has one thing going for it: it’s much easier to parse (the core parser is already available), requires much, much less design work, and alternative parsers are also much easier to write for 3rd party developers.
But the resulting language can be unsatisfying in various ways. It is rather verbose. If you change the type of something, you need to change it in the closing tag. It has very poor support for comments; it’s impossible to comment out an attribute. There are limitations placed on the content of attributes by XML. The markup extensions have to be built "on top" of the XML syntax, not integrated deeply and nicely into it. And, my personal favourite, if you set something via an attribute, you use completely different syntax than if you set the exact same thing as a content property.
It’s also said that since everyone knows XML, XAML requires less learning. Strictly speaking this is true, but learning the syntax is a tiny fraction of the time spent learning a new UI framework; it’s the framework’s concepts that make the curve steep. Besides, the idiosyncracies of an XML-based language might actually add to the "needs learning" basket.
Are these disadvantages outweighted by the ease of parsing? Should the next cool framework continue the tradition, or invest the time to design an awesome DSL that can’t be parsed by existing tools and whose syntax needs to be learned by everyone?
P.S. Not everyone confuses XAML and WPF, but some do. XAML is the XML-like thing. WPF is the framework with support for bindings, theming, hardware acceleration and a whole lot of other cool stuff.