XInclude & Document Function.

I have a Main.xml which includes Books.xml

Main.xml
<Response>
     <node1 href='books.xml'></node>
</Response>

Books.xml
<mynode>
<a>Hello All</a>
</mynode>

Main.xsl
<xsl:value-of select="document(Response/node1/@href)/mynode"/>

document() function works fine.

Can anyone clarify
1. What is the difference between including an XML Using XINCLUDE namespace
to that of the above mentioned way.
2. When & Why one should use XINCLUDE.

Cheersss...
Arun.