There's more or less three parts to the XDK.
One is the 'compiler' that ties in with MS Visual Studio. You need this to compile programs for the xbox.
Another is the dash that replaces MSdash. It's basically a launcher, AFAIK.
The third is the debug BIOS lets you debug programs on your xbox. You can also use it to capture screenshots/videos of games over your LAN.
Edit: Try this for more info
http://www.hydras-wo...oxretailtodebug