1) XSLT is used to transform XML documents into other formats like HTML, text, or XSL formatting objects. It uses XPath to navigate and select elements in an XML tree.
2) Key XSL elements include value-of to extract data, for-each to iterate over elements, sort to sort output, if/choose for conditional logic, and apply-templates to apply templates to child nodes.
3) An example shows an XSLT stylesheet transforming a single student element from an XML document about a library catalog into an HTML display of that element's data.