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The XSL extension in PHP is specifically designed for applying XML transformations. This process involves using XSLT (Extensible Stylesheet Language Transformations), which is a language used to transform and render XML documents into different formats, such as HTML or other XML structures. When utilizing the XSLT processor provided by the XSL extension, developers can define stylesheets that dictate how to manipulate the original XML data, allowing for a wide range of output formats and presentation styles.

By utilizing this extension, developers gain a powerful tool for data presentation and transformation, which is particularly useful in web applications where the output needs to be tailored for user interfaces or further processing. The ability to manipulate XML on the server side and deliver it in various formats makes the XSL extension an integral part of working with XML in PHP.