The XS interface is combined with the library to create a new library which can then be either dynamically loaded or statically linked into perl. Before writing XS, read the CAVEATS section below. An XSUB forms the basic unit of what are the easiest binary options to trade XS interface. After compilation by the xsubpp compiler, each XSUB amounts to a C function definition which will provide the glue between Perl calling conventions and C calling conventions.
The glue code pulls the arguments from the Perl stack, converts these Perl values to the formats expected by a C function, call this C function, transfers the return values of the C function back to Perl. Return values here may be a conventional C return value or any C function arguments that may serve as output parameters. These return values may be passed back to Perl either by putting them on the Perl stack, or by modifying the arguments supplied from the Perl side.
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The above is a somewhat simplified view of what really happens. C function indicates failure, calling different C functions based on numbers and types of the arguments, providing an object-oriented interface, etc. Of course, one could write such glue code directly in C. Perl stack discipline and other such arcana. XS comes to the rescue here: instead of writing this glue C code in long-hand, one can write a more concise short-hand description of what should be done by the glue, and let the XS compiler xsubpp handle the rest. The XS language allows one to describe the mapping between how the C routine is used, and how the corresponding Perl routine is used.
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