Some might scream with joy. Some might say "Well, finally." Some don't even know what it is.
XDS is a drag-and-drop framework. It is (should) be used in any application that can let the user drag an object or file out of one window and into another.
Nautilus had its own way of D&D that only let you drag between Nautilus windows. File-roller, the GNOME archive application, had yet another way. It was impossible to drag a single file from an archive into a Nautilus window.
At the very last moment (as in three days before the release of GNOME 2.20), XDS support was thrown in by demand.
Now it is finally possible to drag a file straight from an archiver or other application to Nautilus. Yippee!