XSLT is used to transform XML documents into other formats like HTML. It uses an XML document and an XSL stylesheet to perform the transformation. The XSL stylesheet contains templates that are applied to the XML data to output a new formatted document. Common XSL elements include xsl:value-of to output node values, xsl:for-each for loops, and xsl:apply-templates to apply templates to child nodes. XSLT provides powerful tools for transforming XML but requires careful debugging due to its complexity.