XML Formatter

It checks that the XML is well-formed: every tag is closed, tags are nested properly, attributes are quoted and there's one root element. If not, it shows the browser's error with the line to look at. It doesn't validate against a schema (XSD or DTD).

Yes. Comments, CDATA sections, processing instructions and the XML declaration are kept when formatting. Minify can remove comments too.

It removes the whitespace between tags, and optionally comments, to make the file as small as possible. Text inside elements is kept exactly.

No. Formatting runs in your browser, so it's fine for config files, sitemaps, feeds and SOAP messages with private data.